When adjusting accrual earnings to obtain cash flows from operations,an increase in Prepaid Rent Expense is subtracted to arrive at cash flow from operations.

Question

Quizplus · Accepted Answer

An increase in Prepaid Rent Expense represents cash paid in advance, which is not considered a cash outflow in the current period. Therefore, it needs to be subtracted to arrive at cash flow from operations.

When Adjusting Accrual Earnings to Obtain Cash Flows from Operations,an