Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?
A) Cash dividends paid.
B) A change in accounts receivable.
C) Depreciation.
D) A change in a prepaid expense.

Question

Quizplus · Accepted Answer

Cash dividends paid are not reported as an adjustment to net income when using the indirect method for computing net cash flows from operating activities. They are considered financing activities, not operating activities. Adjustments for changes in accounts receivable, depreciation, and changes in prepaid expenses are all part of the adjustments made to reconcile net income to net cash provided by operating activities.

Which of the Following Is Not Reported as an Adjustment