When preparing the operating section of the statement of cash flows using the indirect method, which of the following items are subtracted from net income?
A) depreciation expense
B) gain on sale of long-term assets
C) decrease in prepaid expenses
D) increase in income taxes payable

Question

Quizplus · Accepted Answer

Gains on the sale of long-term assets are subtracted from net income in the operating section of the cash flow statement because they are non-operating gains that increase net income but do not involve cash flow from operating activities.

When Preparing the Operating Section of the Statement of Cash