To convert information from your income statement to your cash flow statement,which of the following would you NOT do?
A) Take your net profit and add back depreciation.
B) Add increases in accounts receivable.
C) Subtract increase in inventory.
D) Add increases in accounts payable.
E) Subtract decrease in notes/loans payable.

Question

Quizplus · Accepted Answer

Adding increases in accounts receivable would be converting non-cash revenue to cash-based information, which is not how information is converted from the income statement to the cash flow statement. The other options listed are correct ways to make the conversion.

To Convert Information from Your Income Statement to Your Cash