When using the indirect method, which of the following items should be added to the amount of net income when determining the amount of net cash flow from operating activities?
A)The amount of an increase in the balance of a Land account
B)The amount of a decrease in the balance of a Prepaid Rent account
C)The amount of an increase in the balance of the Accounts Receivable account
D)The amount of a decrease in the balance of the Other Operating Expenses Payable account

Question

Quizplus · Accepted Answer

A decrease in the balance of a Prepaid Rent account indicates that cash was not used for prepaid expenses, thus it should be added back to net income to determine net cash flow from operating activities.

When Using the Indirect Method, Which of the Following Items