A company reports the following adjustments to net income under the indirect method of calculating operating cash
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For each item, explain the circumstances that would require the adjustment. For example, a decrease in accounts receivable means that cash collections for the year are greater than sales. Therefore, a decrease in accounts receivable is added to net income.
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Increases to net income Decrease in accounts receivable Decrease in prepaid insurance Increase in taxes payable Depreciation expense Decreases to net income Decrease in accounts payable Decrease in salaries payable Gain on sale of equipment
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