Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method. (Choices may be used more than once.)
-Increase in the unearned revenue balance.
A)Operating activity--add to net income
B)Operating activity--deduct from net income
C)Inflow from investing activity
D)Outflow from investing activity
E)Inflow from financing activity
F)Outflow from financing activity
G)Noncash investing and financing activity
H)Not reported on statement of cash flows

Question

Quizplus · Accepted Answer

An increase in the unearned revenue balance represents cash received in advance for services or goods to be provided in the future, which is an operating activity. Under the indirect method, increases in current liabilities (like unearned revenue) are added to net income to reconcile it to net cash provided by operating activities.

Use the Following Codes to Indicate How the Cash Flow