Using the indirect method, cash flows from operating activities would be increased by which of the following?
A) Gain on sale of investments
B) Increase in prepaid expenses
C) Decrease in accounts payable
D) Decrease in accounts receivable

Question

Quizplus · Accepted Answer

A decrease in accounts receivable would result in an increase in cash flows from operating activities because it means the company has collected more cash from customers than it had anticipated. Gain on sale of investments would be reported in the investing activities section, increase in prepaid expenses would be reported in the current assets section, and decrease in accounts payable would be reported in the current liabilities section.

Using the Indirect Method, Cash Flows from Operating Activities Would