An increase or decrease in accounts payable during a fiscal period has no effect on the net cash provided by operating activities.

Question

Quizplus · Accepted Answer

A change in accounts payable is included in the calculation of cash flows from operating activities using the indirect method. An increase in accounts payable is added back to net income because it represents an increase in liabilities that did not require the use of cash during the period, whereas a decrease in accounts payable is subtracted from net income because it represents a use of cash during the period. Therefore, changes in accounts payable do have an effect on the net cash provided by operating activities.

An Increase or Decrease in Accounts Payable During a Fiscal