Under the indirect method of preparing the statement of cash flows, which of the following is added to net income in the operating activities section? Decrease in accounts payable Gain on sale of equipment Depreciation expense Increase in accounts receivable

Accounting Mar 20, 2021

Under the indirect method of preparing the statement of cash flows, which of the following is added to net income in the operating activities section?

1. Decrease in accounts payable
2. Gain on sale of equipment
3. Depreciation expense
4. Increase in accounts receivable

Expert Solution

Answer: c .

In case of indirect method of cash flow statement,depreciation expense is added under operating activities to the net income.As depreciation expense comes under the category of non cash expense,thus it is added into net income.

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