Using the indirect method, which of the following would be subtracted from net income?
A)depreciation expense
B)increase in accounts receivable
C)increase in accounts payable
D)decrease in prepaid expenses

Question

Quizplus · Accepted Answer

When using the indirect method for the statement of cash flows, an increase in accounts receivable is subtracted from net income. This is because if accounts receivable increase, it means the company sold more on credit than it collected in cash, reducing the actual cash inflow.

Using the Indirect Method, Which of the Following Would Be