When preparing the operating activities section of the statement of cash flows using the indirect method,an increase in wages payable is subtracted from net income.

Question

Quizplus · Accepted Answer

An increase in wages payable indicates that not all wages have been paid in cash, thus reducing the cash outflow for the period. Therefore, it is added to net income in the operating activities section when using the indirect method.

When Preparing the Operating Activities Section of the Statement of Cash