Listed below are reporting classifications for a statement of cash flows using the indirect method for reporting operating cash flows. Match the reporting classifications with the transactions described below.
-Operating activity, negative adjustment to net income
A)Issuance of bonds at a discount for cash.
B)Depreciation expense.
C)Acquisition of a building for cash.
D)Payment of semi-annual interest on bonds payable.
E)Decrease in accounts payable.

Question

Quizplus · Accepted Answer

A decrease in accounts payable indicates that cash was used to pay off liabilities, which is a cash outflow and thus a negative adjustment to net income in the operating activities section of the cash flow statement.

Listed Below Are Reporting Classifications for a Statement of Cash