When computing the net cash provided by operating activities using the indirect method on the statement of cash flows, which item below would NOT be added to net income?

A) Depreciation.
B) Loss on the sale of an asset.
C) Decrease in accounts payable.
D) Decrease in prepaid expenses.

Question

Aisha Tariq · Accepted Answer

Final Answer : C, Explanation :  A decrease in accounts payable is a use of cash, indicating that the company has paid down its payable balances, which reduces cash flow from operations. Therefore, it would be subtracted from, not added to, net income in the indirect method of the cash flow statement.

When computing the net cash provided by operating activities using the indirect method on the statement of cash flows, which item below would NOT be added to net income?

A) Depreciation.
B) Loss on the sale of an asset.
C) Decrease in accounts payable.
D) Decrease in prepaid expenses.

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Learning Objectives

Learning Objectives

Related questions

When computing the net cash provided by operating activities using the indirect method on the statement of cash flows, which item below would NOT be added to net income?A) Depreciation.B) Loss on the sale of an asset.C) Decrease in accounts payable.D) Decrease in prepaid expenses.

Definitions

Learning Objectives

Learning Objectives

Related questions

When computing the net cash provided by operating activities using the indirect method on the statement of cash flows, which item below would NOT be added to net income?

A) Depreciation.
B) Loss on the sale of an asset.
C) Decrease in accounts payable.
D) Decrease in prepaid expenses.