When using the indirect method to prepare the statement of cash flows,an increase in noncash current assets is
A)subtracted from net income in the cash flows from operating activities section.
B)subtracted from current liabilities in the cash flows from financing activities section.
C)added to net income in the cash flows from operating activities section.
D)added to equipment purchases in the cash flows from investing activities section.

Question

Quizplus · Accepted Answer

An increase in noncash current assets is subtracted from net income in the operating activities section because it represents cash that has not been received, thus reducing cash flow.

When Using the Indirect Method to Prepare the Statement of Cash