Which of the following items would be deducted from net income to determine the net cash provided by operating activities using the indirect method?
A)gain on sale of noncurrent assets and amortization of discount on investment in bonds
B)amortization of bonds payable premium and amortization of intangibles
C)loss on sale of noncurrent assets and amortization of investment credit
D)gain on sale of noncurrent assets and amortization of premium on investment in bonds

Question

Quizplus · Accepted Answer

Gains on sale of noncurrent assets are deducted because they increase net income but do not affect cash flows from operating activities. Amortization of discount on investment in bonds is added back to net income in the indirect method, but it is not a deduction. Therefore, the correct answer involves recognizing that gains (which are deducted) and amortization of discounts (which are actually added back in other contexts, but not relevant here) are involved in adjustments for the indirect method.

Which of the Following Items Would Be Deducted from Net