Which of the following would be added to net income in the operating activities section of a statement of cash flows prepared using the indirect method?
A) an increase in accounts receivable.
B) an increase in prepaid expenses.
C) an increase in accrued liabilities.
D) an increase in property, plant, and equipment.

Question

Quizplus · Accepted Answer

An increase in accrued liabilities indicates that expenses have been incurred but not yet paid in cash, which reduces net income but does not affect cash flow. Therefore, it is added back to net income in the operating activities section of the cash flow statement when using the indirect method.

Which of the Following Would Be Added to Net Income