Cash flow from operations includes all of the following adjustments to net income EXCEPT
A) purchases of new equipment.
B) depreciation.
C) increase or decrease in current liabilities.
D) increase or decrease in current inventory.

Question

Quizplus · Accepted Answer

Purchases of new equipment are considered investing activities, not operating activities, and thus are not adjusted for in the cash flow from operations. Depreciation, changes in current liabilities, and changes in inventory are all adjustments made in the calculation of cash flow from operations.

Cash Flow from Operations Includes All of the Following Adjustments