When using the indirect method to prepare the cash flow statement,increases in prepaids are added back to net income.

Name: When using the indirect method to prepare the cash flow statement,increases in prepaids are added back to net income.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

Increases in prepaid expenses are not added back to net income in the indirect method of preparing the cash flow statement; instead, they are subtracted because they represent cash outflows that do not affect net income.

When Using the Indirect Method to Prepare the Cash Flow