Which statement is false regarding the preparation of the indirect method of the statement of cash flows?
A) An increase in merchandise inventory is subtracted from net income.
B) Depreciation expense is added to net income.
C) An increase in accounts receivable is added to net income.
D) An increase in accounts payable is added to net income.

Question

Which statement is false regarding the preparation of the indirect method of the statement of cash flows? 
A) An increase in merchandise inventory is subtracted from net income.
B) Depreciation expense is added to net income.
C) An increase in accounts receivable is added to net income.
D) An increase in accounts payable is added to net income.

Quizplus · Accepted Answer

An increase in accounts receivable is subtracted from net income, not added, in the indirect method of the statement of cash flows.

Which Statement Is False Regarding the Preparation of the Indirect