Question

Choose the appropriate letter to match the account balance change with the type of adjustment made to net income when using the indirect method to determine net cash flow provided by operating activities.

Account Balance Change

1. _____ Decrease in Property, Plant, and Equipment

2. _____ Increase in Accounts Receivable

3. _____ Decrease in Inventory

4. _____ Decrease in Prepaid Expenses

5. _____ Increase in Accounts Payable

6. _____ Decrease in Accrued Liabilities

7. _____ Decrease in Income Tax Payable

8. _____ Increase in Dividends Payable

9. _____ Gain on Sales of Property, Plant and Equipment

10. _____ Depreciation

Type of Adjustment

A Add item to net income

S Subtract item from net income

N No adjustment necessary

Answer

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