Under the indirect method of cash flow, which of the following adjustments would NOT be made to net income when computing cash from operating activities?

Question

Quizplus · Accepted Answer

Under the indirect method of cash flow, adjustments to net income for changes in working capital accounts involve adding back non-cash expenses (like depreciation) and changes in operational current assets and liabilities. An increase in Accounts Payable indicates that the company has more cash because it hasn't paid out that money yet, so it's added to net income. Conversely, a decrease in Accounts Payable would imply that the company has paid more cash than what expenses were incurred, reducing cash, so it would be subtracted, not added. Therefore, adding a decrease in Accounts Payable is not a correct adjustment.

Under the Indirect Method of Cash Flow, Which of the Following