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

Question

Quizplus · Accepted Answer

A decrease in prepaid expenses is added back to net income in the indirect method because it represents an expense recorded that did not involve an outlay of cash during the period.

Which of the Following Items Is Added to Net Income