Indicate whether each item should be added to or subtracted from net income to arrive at the net cash flow from operating activities.a.Increase in inventory b.Amortization of discount on investment in bonds c.Decrease in accounts payable d.Amortization of discount on bonds payable e.Increase in salaries payable f.Increase in prepaid expenses g.Subsidiary loss under the equity method h.Gain on disposal of equipment i.Decrease in accounts receivable j.Increase in deferred tax liability

Cash flows from operating activities: It is a section of Statement of cash flow that explains the sources and uses of cash from business activities.a. Increase in inventory Subtracted b. Amortization of discount on investment in bonds Subtracted c. Decrease in accounts payable Subtracted d. Amortization of discount on bonds payable Added e. Increase in salaries payable Added f. Increase in prepaid expenses Subtracted g. Subsidiary loss under the equity method Added h. Gain on disposal of equipment Subtracted i. Decrease in accounts receivable Added j. Increase in deferred tax liability Subtracted

Answered: Indicate whether each item should be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Indicate whether each item should be added to or subtracted from net income to arrive at the net cash flow from operating activities.

a.	Increase in inventory
b.	Amortization of discount on investment in bonds
c.	Decrease in accounts payable
d.	Amortization of discount on bonds payable
e.	Increase in salaries payable
f.	Increase in prepaid expenses
g.	Subsidiary loss under the equity method
h.	Gain on disposal of equipment
i.	Decrease in accounts receivable
j.	Increase in deferred tax liability

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