Which of the following would be shown as a deduction from net income when calculating net cash flow from operating activities using the indirect method?
A) Decrease in accounts payableAccounts Payable for inventory purchases
B) Loss on the sale of equipment
C) Decrease in accounts receivableAccounts Receivable
D) Increase in salaries payable

Question

Quizplus · Accepted Answer

Net cash flow from operating activities = Net income +/- Adjustments to reconcile net income to net cash flow from operating activities
Net cash flow from operating activities = Net income - Increase in current assets + Decrease in current assets + Increase in current liabilities - Decrease in current liabilities + Depreciation expense - Gain on sale of equipment + Loss on sale of equipment
Given the answer choices:
Net cash flow from operating activities = Net income + Decrease in current assets (such as Accounts Receivable)+ Increase in current liabilities (such as Salaries Payable)- Decrease in current liabilities (such as Accounts Payable)+ Loss on sale of equipment

Which of the Following Would Be Shown as a Deduction