Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using the indirect method.
-Increased the accounts payable balance.
A)Operating activity-add to net income
B)Operating activity-deduct from net income
C)Inflow from investing activity
D)Outflow from investing activity
E)Inflow from financing activity
F)Outflow from financing activity
G)Noncash investing and financing activity
H)Not reported on statement of cash flows

Question

Quizplus · Accepted Answer

When using the indirect method for the statement of cash flows, an increase in accounts payable is added to net income in the operating activities section. This is because it represents an increase in cash flow; the company has received goods or services but has not yet paid cash for them, effectively increasing its cash position.

Use the Following Codes to Indicate How the Cash Flow