When accrued liabilities increase from the beginning to the end of the year,it means accrued expenses were greater than cash payment of such expenses so the increase would be added to net income to convert to cash flow from operating activities under the indirect method.

Question

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Accrued liabilities increase when accrued expenses exceed the cash payment of such expenses. Therefore, the increase in accrued liabilities is added to net income.

When Accrued Liabilities Increase from the Beginning to the End