When preparing a statement of cash flows using the indirect method,the amortization of trademarks should be reported as a(n)
A) increase in cash flows from investing activities.
B) reduction in cash flows from investing activities.
C) increase in cash flows from operating activities.
D) reduction in cash flows from operating activities.

Question

Quizplus · Accepted Answer

Amortization of trademarks is a non-cash expense that is added back to net income in the operating activities section of the cash flow statement when using the indirect method. This adjustment is made because the expense reduces net income but does not involve an outflow of cash.

When Preparing a Statement of Cash Flows Using the Indirect