Question

When using the indirect method to calculate and report net cash provided or used by operating activities, which of the following is subtracted from net income?1) Bad debts expense.2) Decrease in income taxes payable.3) Depreciation expense.4) Decrease in merchandise inventory.5) Amortization of intangible assets.

Answer 1

Answer:

Decrease in income taxes payable are subtracted from net income

Explanation:

1) Bad debts expense. Expenses with no cash outflows are added back to net income

2) Decrease in income taxes payable are subtracted from net income

3) Depreciation expense  are added to net income.

4) Decrease in merchandise inventory  are added to net income.

5) Amortization of intangible assets  are added to net income.