All of the following are additions to net income when preparing the statement of cash flows under the indirect method except:
A) losses on sales of long term assets.
B) a decrease in accounts payableAccounts Payable.
C) a decrease in prepaymentsPrepaid Insurance.
D) a decrease in accounts receivableAccounts Receivable.

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 or Prepaid Insurance)+ Increase in current liabilities (such as Accounts Payable)- Decrease in current liabilities (such as Accounts Payable)+ Loss on sale of equipment

All of the Following Are Additions to Net Income When