Asked by Juleny Degollado on May 11, 2024
Verified
Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, an increase in property, plant, and equipment is subtracted from net income.
Indirect Method
An accounting technique used to prepare the cash flow statement, where increases in non-cash current assets are subtracted from, and increases in current liabilities are added to, net income to arrive at net cash flow from operating activities.
Net Cash
The difference between all cash inflows and outflows within a given period, often used to assess financial health.
Operating Activities
Day-to-day actions and transactions that are directly related to running a business, such as buying, selling, and production.
- Identify the modifications to net income involved in deriving net cash from operating activities through the indirect method.
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Learning Objectives
- Identify the modifications to net income involved in deriving net cash from operating activities through the indirect method.
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