When calculating the net cash provided by operating activities,which procedure should NOT be carried out? Assume the indirect method is used.
A) add depreciation expense
B) subtract a decrease in accounts payable
C) subtract a decrease in prepaid expenses
D) add a decrease in inventories

Question

Quizplus · Accepted Answer

The decrease in prepaid expenses should be added back to calculate net cash provided by operating activities as it represents an increase in cash flows that were previously recorded as an outflow when the expenses were initially paid. The other options (A, B, D) are all correctly included or excluded in the calculation.

When Calculating the Net Cash Provided by Operating Activities,which Procedure