Which of the following is added to net income when using the indirect method to determine cash flows from operations?

Question

Quizplus · Accepted Answer

When using the indirect method to determine cash flows from operations, non-cash expenses and changes in working capital are adjusted from the net income. An increase in accounts payable indicates that the company has more cash because it hasn't paid out that money yet. A decrease in accounts receivable indicates that the company has collected cash from its customers. Both of these adjustments increase the cash flow from operations, which is why they are added back to net income in the indirect method.

Which of the Following Is Added to Net Income When