Which of the following would require an adjustment in the computation of cash flow from operations using the indirect method?
I. Depreciation expense
II. Loss on sale of asset
III. Sale of services to costumers for cash
IV. Utility bill received and paid in cash
A) I
B) I and II
C) I and III
D) IV

Question

Quizplus · Accepted Answer

Depreciation expense and loss on sale of asset are non-cash transactions that need to be added back to net income in order to calculate cash flow from operations using the indirect method. Sale of services to customers for cash is a cash transaction that is already included in the computation of cash flow from operations. Utility bill received and paid in cash is also a cash transaction that is already included in the computation of cash flow from operations.

Which of the Following Would Require an Adjustment in the Computation