Under the indirect method,which of the following items would be subtracted from net income to determine the cash flow from operating activities?
A) Loss on the sale of equipment.
B) Increase in the balance of accounts receivable.
C) Increase in accrued interest payable.
D) Depreciation expense.

Question

Quizplus · Accepted Answer

An increase in accounts receivable is subtracted from net income in the indirect method of cash flow statement because it represents revenue that has been recognized but not yet received in cash, thus not affecting the actual cash flow.

Under the Indirect Method,which of the Following Items Would Be