When calculating cash flow from operations, an increase in prepaid expenses would be added in to the cash flow.

Question

Quizplus · Accepted Answer

An increase in prepaid expenses implies that cash has been paid in advance for expenses that will be incurred in the future. Therefore, this would be subtracted from cash flow from operations as it represents an outflow of cash that is not related to current operating activities.

When Calculating Cash Flow from Operations, an Increase in Prepaid