Excerpts from Deblois 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 Accounts Payable is added to net income; The change in Accrued Liabilities is subtracted from net income
B) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is added to net income
C) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is added to net income
D) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is subtracted from net income

Question

Excerpts from Deblois 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 Accounts Payable is added to net income; The change in Accrued Liabilities is subtracted from net income
B) The change in Accounts Payable is added to net income; The change in Accrued Liabilities is added to net income
C) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is added to net income
D) The change in Accounts Payable is subtracted from net income; The change in Accrued Liabilities is subtracted from net income

ELLASON DOTSON · Accepted Answer

Final Answer : A, Explanation :    An increase in a current liability is added to net income; a decrease in a current liability is subtracted.

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