When the indirect method is used to determine net cash provided by (used in)operating activities,adding an increase in Interest Payable to net income eliminates the effect of recording expenses that:
A)increased net income,but did not impact cash.
B)decreased net income,but did not impact cash.
C)increased net income and increased cash flow.
D)decreased net income and decreased cash flow.

Question

Quizplus · Accepted Answer

Adding increases in current liabilities eliminates the effects of transactions that decreased net income but did not affect cash.For example,when interest is accrued,a company decreases net income but cash is not affected.

When the Indirect Method Is Used to Determine Net Cash