Excerpts from Aultman Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

A) The change in Inventory is added to net income; The change in Accounts Payable is added to net income
B) The change in Inventory is added to net income; The change in Accounts Payable is subtracted from net income
C) The change in Inventory is subtracted from net income; The change in Accounts Payable is added to net income
D) The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income

Question

Excerpts from Aultman Corporation's comparative balance sheet appear below:

Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

A) The change in Inventory is added to net income; The change in Accounts Payable is added to net income
B) The change in Inventory is added to net income; The change in Accounts Payable is subtracted from net income
C) The change in Inventory is subtracted from net income; The change in Accounts Payable is added to net income
D) The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income

Maddie Vertes · Accepted Answer

Final Answer : D, Explanation :    An increase in a current asset is subtracted from net income.A decrease in a current liability is subtracted from net income.

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