When the direct method is used to determine the cash flows from operating activities,other operating expenses are converted into cash outflows by:
A)adding changes in prepaid expenses and accrued liabilities to other expenses.
B)subtracting increases in prepaid expenses and subtracting decreases in accrued liabilities from other expenses.
C)adding increases in prepaid expenses and adding decreases in accrued liabilities to other expenses.
D)subtracting changes in prepaid expenses and accrued liabilities from other expenses.

Question

Quizplus · Accepted Answer

Other operating expenses are converted into cash outflows by adding increases (or subtracting decreases)in noncash current assets,and adding decreases (or subtracting increases)in current liabilities.

When the Direct Method Is Used to Determine the Cash