Which of the following is subtracted from net income in computing cash flows from operating activities using the indirect method?

Question

Quizplus · Accepted Answer

Increases in accounts receivable are subtracted from net income in computing cash flows from operating activities using the indirect method. This is because an increase in accounts receivable means that a company has not yet received cash for goods or services sold, and therefore it is not included in cash flows from operating activities. Decreases in accounts receivable would be added back to net income. Decrease in taxes payable and depreciation expense are not subtracted from net income, but rather added back as non-cash expenses or increases in liabilities that are not included in cash flows from operating activities.

Which of the Following Is Subtracted from Net Income in Computing