In preparing the statement of cash flows by the indirect method, which of the following is an incorrect statement of one of the general rules to convert net income to a cash-basis equivalent?

Multiple Choice

• Increases in current assets are subtracted from net income.

• Noncash revenue and gains are subtracted from net income.

• Decreases in current assets are added to net income.

• Increases in current liabilities are subtracted from net income.