In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is
A) deducted from net income.
B) added to net income.
C) ignored because it does not affect net income.
D) ignored because it does not affect expenses.

Question

Quizplus · Accepted Answer

An increase in prepaid expenses is deducted from net income because it represents cash paid out that is not reflected in the current period's expenses.

In Calculating Net Cash Provided by Operating Activities Using the Indirect