If the indirect method is used to prepare a statement of cash flows,which of the following would be deducted from net income to arrive at net cash flows from operating activities?
A) Increase in accounts payable
B) Increase in income taxes payable
C) Increase in accounts receivable
D) Decrease in prepaid rent

Question

Quizplus · Accepted Answer

An increase in accounts receivable is deducted from net income because it represents revenue that has been recognized but not yet collected in cash, thus reducing cash flows from operating activities.

If the Indirect Method Is Used to Prepare a Statement