If the indirect method is used to prepare a statement of cash flows, which of the following would be deducted from net income to arrive at net cash flows from operating activities?
A) Increase in accrued liabilities
B) Increase in income taxes payable
C) Increase in accounts receivable
D) Decrease in prepaid expenses

Question

Quizplus · Accepted Answer

An increase in accounts receivable indicates that more revenue was recognized than cash received, so it is deducted from net income to calculate cash flows from operating activities.

If the Indirect Method Is Used to Prepare a Statement