Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?
A) A decrease in accounts payableAccounts Payable is deducted from net income
B) A decrease in prepaid insurancePrepaid Insurance is added to net income
C) Gain on the retirement of bonds is deducted from net income
D) Depreciation expense is subtracted from net income

Question

Quizplus · Accepted Answer

Since noncash expenses,such as depreciation,are deducted in determining net income,they must be added back to the amount of net income when computing net cash flow from operating activities.

Which of the Following Statements Is Incorrect Regarding the Use