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When Using the Indirect Method,the Calculation of Cash Flows Provided

Question 145

Essay

When using the indirect method,the calculation of cash flows provided by operating activities begins with net income.
Required:
Indicate whether the following items are added or deducted from net income to arrive at cash flow from operating activities.
AddDeductGains on investing and financing transactionsLosses on investing and financing transactions Non-cash expenses such as depreciationDecreases in current asset balancesDecreases in current liability balancesIncreases in current asset balancesIncreases in current liability balances\begin{array}{|l|l|l|}\hline & \text{Add} & \text{Deduct} \\\hline \text{Gains on investing and financing transactions} & & \\\hline \text{Losses on investing and financing transactions }& & \\\hline \text{Non-cash expenses such as depreciation} & & \\\hline \text{Decreases in current asset balances} & & \\\hline \text{Decreases in current liability balances} & & \\\hline \text{Increases in current asset balances} & & \\\hline \text{Increases in current liability balances} & & \\\hline\end{array}

Correct Answer:

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\(\begin{array}{|l|c|c|}
\hline & \text{...

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