When using the indirect method to prepare the operating activities section of the statement of cash flows,how is an increase in noncash current assets handled?
A)It is subtracted from net income in the cash flows from operating activities section.
B)It is subtracted from current liabilities in the cash flows from financing activities section.
C)It is added to net income in the cash flows from operating activities section.
D)It is added to equipment purchases in the cash flows from investing activities section.

Question

Quizplus · Accepted Answer

Decreases in noncash current assets are added to and increases in noncash current assets are subtracted from net income to determine net cash flow from operating activities.

When Using the Indirect Method to Prepare the Operating Activities