Which of the following adjustments to net income is not correct if you are trying to calculate cash flow from operating activities?
A) Add increases in accounts payable
B) Add back depreciation
C) Add increases in accounts receivable
D) Deduct increases in inventory

Question

Quizplus · Accepted Answer

Increases in accounts receivable should be deducted, not added, because they represent sales made on credit, which do not provide cash inflow.

Which of the Following Adjustments to Net Income Is Not