In preparing a statement of cash flows under the indirect method,a decrease in accounts receivable would be reported or included as a(n):
A)Addition to net income in the operating activities section.
B)Deduction from net income in the operating activities section.
C)Financing activity.

Question

Quizplus · Accepted Answer

A decrease in accounts receivable indicates that cash has been collected from customers, which increases the cash flow from operating activities. Therefore, it is added back to net income in the operating activities section when using the indirect method.

In Preparing a Statement of Cash Flows Under the Indirect