Which of the following is a way that the operating activity section of the statement of cash flows adjusts Net Income from the balance sheet?
A) It subtracts all expenses and costs related to a firm's operating activities.
B) It adds all non-cash entries related to a firm's operating activities.
C) It adds the cash that flows from investors to a firm.
D) It removes the cash used for investment purposes.

Question

Quizplus · Accepted Answer

The operating activity section of the statement of cash flows adjusts net income by adding all non-cash entries related to a firm's operating activities (such as depreciation and amortization) and by subtracting cash flows related to expenses and costs incurred in those activities. The section does not include cash flows from investors or investment purposes, which are accounted for in the financing and investing sections of the statement, respectively.

Which of the Following Is a Way That the Operating