Which of the following is NOT a correct practice when adjusting net income to net operating cash flows?
A)Subtract depreciation expense.
B)Add losses on sales of assets.
C)Subtract increase in Accounts Receivable.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash expense already subtracted to calculate net income. When adjusting net income to arrive at net operating cash flows, you add back depreciation expense because it does not reduce actual cash. Subtracting it again would be incorrect.

Which of the Following Is NOT a Correct Practice When