Given the items below,which of the following is an addition to net income to arrive at operating cash flows using the indirect method? I.Loss on sale of assets
II)Increase in Supplies
III)Increase in Accounts Payable
IV)Increase in Accounts Receivable
A)I.and III.
B)I.only.
C)III.and IV.

Question

Quizplus · Accepted Answer

In the indirect method of calculating operating cash flows, net income is adjusted for non-cash expenses and changes in non-cash current assets and liabilities. 
I.Loss on sale of assets is a non-cash expense and is added back to net income.
III)Increase in Accounts Payable is a non-cash increase in a liability and is added back to net income. 
II) Increase in Supplies and IV) Increase in Accounts Receivable are both increases in current assets and are subtracted from net income to arrive at operating cash flows.

Given the Items Below,which of the Following Is an Addition