On a statement of cash flows prepared using the indirect method, an increase in Accounts Payable during the period is:
A)deducted from net income to determine net cash provided by operating activities.
B)added to net income to determine net cash provided by financing activities.
C)added to net income to determine net cash provided by operating activities.
D)deducted from net income to determine net cash provided by financing activities.

Question

Quizplus · Accepted Answer

An increase in Accounts Payable indicates that expenses have been incurred but not yet paid, which means cash has not been used. Therefore, it is added back to net income in the operating activities section of the cash flow statement.

On a Statement of Cash Flows Prepared Using the Indirect