The necessary adjustment(s)to the operating expenses amount shown on the income statement to arrive at cash paid for operating expenses is(are):

Question

Quizplus · Accepted Answer

The adjustment to arrive at cash paid for operating expenses requires subtracting the change in operating accruals and depreciation expense. The change in operating accruals represents the difference between expenses recognized on the income statement and paid for with cash. Depreciation expense represents a non-cash expense that should be added back to reflect the actual cash paid for operating expenses. Therefore, the best choice is C, subtract the change in operating accruals and subtract depreciation expense.

The Necessary Adjustment(s)to the Operating Expenses Amount Shown on the Income