In preparing the statement of cash flows by the indirect method, which of the following is a correct statement of one of the general rules to convert net income to a cash-basis equivalent?
A. All noncash expenses and losses are subtracted from net income.
B. Decreases in current liabilities are added to net income.
C. Losses on the sale of long-term assets are subtracted from net income.
D. Increases in current assets are subtracted from net income.
Answer: D
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