Which of the following would be added to net income when determining cash flows from operating activities under the indirect method?
A) A gain on the sale of land.
B) An increase in prepaid expenses.
C) A decrease in accounts payable.
D) A decrease in accounts receivable.

Question

Quizplus · Accepted Answer

A decrease in accounts receivable indicates that cash has been collected from customers, which increases cash flow, so it is added back to net income in the indirect method.

Which of the Following Would Be Added to Net Income