Which of the following items is added to net income when using the indirect method of calculating cash flows provided by operating activities?
A)An increase in accounts payable
B)An increase in prepaid expenses
C)A decrease in accrued revenues
D)A decrease in taxes payable

Question

Quizplus · Accepted Answer

An increase in accounts payable is added back to net income in the indirect method because it represents an expense that has been incurred but not yet paid in cash, thus increasing cash flow from operations.

Which of the Following Items Is Added to Net Income