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

Question

Quizplus · Accepted Answer

An increase in Accounts Payable indicates that expenses have been incurred but not yet paid in cash, which means cash was conserved. Therefore, it is added back to net income in the operating activities section to adjust for the non-cash expense.

On a Statement of Cash Flows Prepared Using the Indirect