Which of the following statements about calculation of cash flows from operating activities under the indirect method is correct?
A)When the indirect method is used,changes in current liabilities are subtracted while changes in current assets are added to convert net income to net cash flow from operating activities.
B)When the indirect method is used,depreciation expense is added to net income as a step in the process of calculating net cash flow provided by operating activities.
C)When the indirect method is used,changes in long-term assets are added to convert net income to net cash flow provided by operating activities.
D)When the indirect method is used,changes in long-term liabilities are subtracted to convert net income to net cash flow provided by operating activities.

Question

Quizplus · Accepted Answer

To eliminate the effect of having deducted Depreciation Expense in the income statement,we add it back to net income in the operating activities section of the statement of cash flows.

Which of the Following Statements About Calculation of Cash Flows