Of the following,which has a negative effect on the computation of cash flow from operations using the indirect method?
A)Decrease in Inventory
B)Increase in Accounts Payable
C)Increase in Accounts Receivable
D)Decrease in Prepaid Insurance

Question

Quizplus · Accepted Answer

An increase in accounts receivable means that the company is not receiving cash for its sales during the current period, which negatively impacts the cash flow from operations computed using the indirect method. Decrease in inventory, increase in accounts payable, and decrease in prepaid insurance all have a positive effect on the computation of cash flow from operations.

Of the Following,which Has a Negative Effect on the Computation