To determine the cash flow from operating activities,certain adjustments must be made which include
A)Add back depreciation,amortization,and stock-based compensation expenses.
B)Adjust for any changes in operating assets and liabilities.
C)Add or subtract any changes in deferred income taxes.
D)All of the above.

Question

Quizplus · Accepted Answer

To determine the cash flow from operating activities, all of the adjustments listed in options A, B, and C must be made.

A) Depreciation, amortization, and stock-based compensation expenses are non-cash expenses that must be added back to determine the cash flow from operating activities.

B) Any changes in operating assets and liabilities, such as accounts receivable, inventory, and accounts payable, must be adjusted for as they affect cash flows.

C) Deferred taxes are taxes that have been recognized, but not yet paid, and any changes in deferred income taxes must be added or subtracted to determine the cash flow from operating activities.

Therefore, the correct answer is D, all of the above adjustments must be made to determine the cash flow from operating activities.

To Determine the Cash Flow from Operating Activities,certain Adjustments Must