Identify five items that are adjustments to convert net income to net cash provided by operating activities under the indirect method.
A. Increase/decrease in accounts receivable.
B. Increase/decrease in accounts payable.
C. Payment of cash dividends.
D. Purchase of equipment.
E. Depreciation expense.
F. Increase/decrease in inventory.
G. Gain or loss on disposal of a noncurrent asset.

Question

30-11-2022
Business

contestada

Identify five items that are adjustments to convert net income to net cash provided by operating activities under the indirect method.
A. Increase/decrease in accounts receivable.
B. Increase/decrease in accounts payable.
C. Payment of cash dividends.
D. Purchase of equipment.
E. Depreciation expense.
F. Increase/decrease in inventory.
G. Gain or loss on disposal of a noncurrent asset.

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Tutorconsortium438 Tutorconsortium438 · Answer 1 · 2022-12-02T06:26:10+01:00

According to the indirect approach, the following five items must be adjusted in order to translate net income to net cash generated by operational activities:

A. Increase/decrease in accounts receivable.

B. Increase/decrease in accounts payable.

E. Depreciation expense.

F. Increase/decrease in inventory.

G. Gain or loss on disposal of a noncurrent asset.

Note:

C. Payment of cash dividends belongs to the financing activities section.

D. Purchase of equipment belongs to the investing activities section.

What are operating activities?

Operating activities are all the things a business undertakes to consistently advertise its goods and services. Non-operating activities are one-time occurrences that may have an impact on sales, costs, or cash flow but are unrelated to the regular, main activity of the company.

Learn more about operating activities here:
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