A decrease in prepaid expenses of $8,000 for the year
A)decreases cash flow from operating activities by $8,000.
B)increases cash flow from operating activities by $8,000.
C)decreases cash flow from operating activities by $16,000.
D)increases cash flow from operating activities by $16,000.

Question

Quizplus · Accepted Answer

A decrease in prepaid expenses is an adjustment to net income in the operating activities section of the cash flow statement. It indicates that less cash was spent on prepaid expenses than was expensed, which increases cash flow from operating activities.

A Decrease in Prepaid Expenses of $8,000 for the Year