Under the indirect approach, adjustments must be made to net income in the operations section for all of the following items, EXCEPT
A) depreciation.
B) gain on the sale of equipment.
C) loss on the sale of land.
D) proceeds for the sale of temporary investments.

Question

Quizplus · Accepted Answer

Proceeds for the sale of temporary investments are already considered as part of operating cash inflows, so no adjustment is needed in the operations section under the indirect approach. Depreciation is added back to net income, while gains on the sale of equipment are subtracted and losses on the sale of land are added back.

Under the Indirect Approach, Adjustments Must Be Made to Net