Adjustment in Cash Flow Statement using Indirect Method

Easy Financial Statements Cash Flow Statement

In preparing a company's cash flow statement using the indirect method, certain adjustments are made to the net income figure reported on the income statement. One of these adjustments involves non-cash expenses.

Which of the following adjustments is made to reconcile net income to cash flows from operating activities?

Deducting depreciation expense from net income.

Adding amortization expense to net income.

Subtracting the increase in accounts payable from net income.

Hint

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