In the preparation of a statement of cash flows,adjustments to net income to reconcile net income to cash from operating activities include
A) amortization of organization cost.
B) the difference between the purchase price and the resale price of treasury stock (assuming the cost method of accounting for treasury stock).
C) dividends received.
D) redemption premium on preferred stock redeemed during the period.

Question

Quizplus · Accepted Answer

The preparation of a statement of cash flows involves adjusting net income to reconcile it with cash from operating activities. Amortization of organization cost is a non-cash expense that is added back to net income to arrive at cash flows from operating activities. Options B, C, and D do not involve adjustments to net income for the purpose of reconciling it with cash from operating activities.

In the Preparation of a Statement of Cash Flows,adjustments to Net