Compute cash flows from operating activities

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Reference no: EM131318278

Depreciation expense, amortization of patents, and amortization of bond discount are examples of items that are added to net income when using the indirect method of presenting cash flows from operating activities.

Amortization of premium on bonds and a reduction in deferred taxes are examples of items that are deducted from net income when using the indirect method of presenting cash flows from operating activities.

Explain why these adjustments to net income are made to compute cash flows from operating activities.

Reference no: EM131318278

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