Which of the following is a correct statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?
A)Increases in current liabilities are added to net income.
B)All non-cash expenses and losses are subtracted from net income.
C)Increases in current assets are added to net income.
D)Decreases in current assets are subtracted from net income.

Question

Quizplus · Accepted Answer

Because increases in current liabilities are caused by decreases in cash that are less than expenses recognized, they are added to net income to arrive at cash flows from operating activities.

Which of the Following Is a Correct Statement of One