When preparing the statement of cash flows under the indirect method,an appropriate procedure would be to
A)subtract an increase in wages payable.
B)subtract an increase in accounts receivable.
C)subtract amortization expense.
D)determine cash paid to suppliers.
E)add a gain from the sale of a fixed asset.

Question

Quizplus · Accepted Answer

Under the indirect method, an increase in accounts receivable is subtracted from net income because it represents revenue that has been recognized but not yet collected in cash, thus reducing cash flow from operating activities.

When Preparing the Statement of Cash Flows Under the Indirect