When preparing the operating section of the statement of cash flows using the indirect method, which of the following items are added to net income?
A) decrease in accrued expenses
B) gain on sale of long-term assets
C) bad debt expense
D) increase in accounts receivable

Question

Quizplus · Accepted Answer

Bad debt expense is a non-cash charge that reduces net income but does not affect cash flow, so it is added back to net income in the operating section of the cash flow statement using the indirect method.

When Preparing the Operating Section of the Statement of Cash