When using the indirect method to determine operating cash flows, how is the decrease in accounts payable shown on the Statement of Cash Flows?
A)operating activity
B)investing activity
C)financing activity
D)noncash investing and financing activity
E)not reported on the statement of cash flows

Question

Quizplus · Accepted Answer

A decrease in accounts payable indicates that the company has paid off some of its outstanding debts, which would be considered a use of cash in operating activities. Therefore, the decrease in accounts payable would be shown as a negative adjustment to net income in the operating activities section of the statement of cash flows.

When Using the Indirect Method to Determine Operating Cash Flows