In preparing the statement of cash flows by the indirect method,a decrease in a current liability is deducted from net income.

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When preparing the statement of cash flows using the indirect method, a decrease in a current liability is deducted from net income. This is because a decrease in a current liability means that less cash was used to pay off that liability, which effectively increases the cash balance. Therefore, it is deducted from net income to arrive at the cash flows from operating activities.

In Preparing the Statement of Cash Flows by the Indirect