When using the indirect method to prepare the operating activities section of the statement of cash flows,how is a decrease in current liabilities handled?
A)It is subtracted from net income in the cash flows from operating activities section.
B)It is subtracted from current assets in the cash flows from financing activities section.
C)It is added to net income in the cash flows from operating activities section.
D)It is added to inventory purchases in the cash flows from investing activities section.

Question

Quizplus · Accepted Answer

Increases in noncash current liabilities are added to and decreases in noncash current liabilities are subtracted from net income to determine net cash flow from operating activities.

When Using the Indirect Method to Prepare the Operating Activities