Which one of the following items is the most common adjustment to the cash flow from operating activities under the indirect method because cash does not increase or decrease?
A)Change in receivables
B)Depreciation expense
C)Change in fixed assets
D)Change in cash

Question

Quizplus · Accepted Answer

Depreciation expense is the most common adjustment to the cash flow from operating activities under the indirect method because it is a non-cash expense that reduces net income but does not involve an actual outflow of cash. Therefore, it must be added back to net income in the operating activities section of the statement of cash flows to reflect the actual cash flow from operating activities.

Which One of the Following Items Is the Most Common