Statement of cash flow?

which of the following adjustments would not be made to net income when computing net cash flows from operating activities by the indirect method?

a)add an increase in Account Payable

b)add an increase in Accounts Receivable

c)add depriciation expense

d) subtract the gain on sale of land

According to me it would be (a)

Statement of cash flow?rate my

Depreciation expense is a non-cash expense...must be added back

Accounts Payable is a liability...an increase must be added back.

Accounts Receivable is an asset...an increase must be subtracted.

Gain on sale of land is not an operating activity...it does not apply.

Therefore, the answer is (b)

Statement of cash flow?

loan

noncash items such as depreciation should be added back

increase in assets is a decrease in cash and vice versa

increase in liabilities is an increase in cash and vice versa

a gain on sale of PP%26amp;E is a deduction from cash a loss is added to cash in the operating section for indirect

Currently studying to take the CPA exam, I know this subject inside and out.|||It should be B.

Increase in Accounts Receivable should be deducted from the Statement of Cash flow, since using the indirect method, where we started with net income. Accounts Receivable are additions to revenue, but still uncollected (no cash flow). Therefore, any increase in Accounts Receivable should be deducted from cash flow using the indirect method.

Letter A is incorrect, since increase in Accounts Payable allow us to acquire goods without disbursing cash, therefore an increase in Accounts Payable will indirectly be an increase in cash flow.