Under the indirect method,an increase in wages payable would be added back to net income when calculating net cash flow from operating activities.

Question

Quizplus · Accepted Answer

In the indirect method of calculating cash flow from operating activities, adjustments are made to net income to arrive at the operating cash flow. An increase in wages payable represents an expense that has not yet been paid in cash, so it is added back to net income to reflect the fact that it did not use up cash during the period. Therefore, the statement is true.

Under the Indirect Method,an Increase in Wages Payable Would Be