Which of the Following Adjustments to Net Income Is Incorrect

question 163

Multiple Choice

Which of the following adjustments to net income is incorrect when using the indirect method for computing cash flows from operating activities?

• A) Deduct depreciation expense from net income.
• B) Add a decrease in inventory to net income.
• C) Deduct an increase in prepaid expenses from net income.
• D) Add an increase in accounts payable to net income.

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