Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?

Depreciation expense

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Repayment of bonds payable

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Gain on sale of land

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None of these

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Solution

The correct option is C
Gain on sale of land

Gain on sale of machinery would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities.

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Q. Under indirect method, which of the following items must be deducted from reported net income to determine net cash flow from operating activities?

In indirect method of preppearation of cash flow statement, the _______ figure from the income statement is used to calculate the amount of net cash flow from operating activities.

Use the following information to calculate net cash flow from operating activities using indirect method:

$\begin{matrix} Net Income & 7, 000 Depreciation Expense & 1, 000 Increase in Accounts Receivable & 4, 400 Increase in Prepaid Rent & 7, 000 Decrease in Prepaid Insurance & 1, 300 Increase in Accounts Payable & 14, 000 Increase in Wages Payable & 1, 000 Decrease in Income Tax Payable & 700 Gain on Sale of Equipment & 1, 800 \end{matrix}$

The method for presenting net cash provided by operating activities that starts with net income and adjusts it for items that affected reported net income but that did not affect cash is called the ____________.

This method starts with net income and converts it to operating cash flow by adjusting for items that were used to calculate net income but did not affect cash. This method is …..

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Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?

The correct option is C Gain on sale of land Gain on sale of machinery would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities.

The correct option is C
Gain on sale of land

Gain on sale of machinery would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities.