Under the indirect method for preparing the statement of cash flows, decreases in current assets are _____ net income in the cash flows from operating activities section.
A) subtracted from
B) added to
C) not used in calculating
D) cannot tell from the information given

Question

Quizplus · Accepted Answer

Decreases in current assets are added to net income in the cash flows from operating activities section under the indirect method because they indicate that cash has increased (e.g., through the collection of receivables or the sale of inventory), which is not reflected in the net income.

Under the Indirect Method for Preparing the Statement of Cash