Which of the following adjustments to net income is NOT correct if you want to calculate cash flow from financing activities?
A)Add dividends paid
B)Add any increase in long-term borrowing
C)Add proceeds from sale of stock
D)Add any increase in short-term borrowing

Question

Quizplus · Accepted Answer

Dividends paid are not added back to net income when calculating cash flow from financing activities; instead, they are subtracted because they represent cash outflows to shareholders. Increases in long-term and short-term borrowing and proceeds from the sale of stock are considered inflows and are added when calculating cash flow from financing activities.

Which of the Following Adjustments to Net Income Is NOT