On a statement of cash flows, an increase in a prepaid expense:
A)is included in computing cash flows from operating activities.
B)is included in computing cash flows from investing activities.
C)is included in computing cash flows from financing activities.
D)is not used in computing cash flows.

Question

Quizplus · Accepted Answer

An increase in a prepaid expense is an operating activity because prepaid expenses are payments made in advance for goods and services that will be used within a certain period of time. Therefore, they are included in the computation of cash flows from operating activities.

On a Statement of Cash Flows, an Increase in a Prepaid