When using the indirect method of preparing the statement of cash flows, an increase in accounts payable should be treated as ________.
A) a cash outflow
B) inflow and outflow of cash
C) an addition to net income
D) a deduction from net income

Question

Quizplus · Accepted Answer

An increase in accounts payable indicates that expenses have been incurred but not yet paid, which means cash has been conserved, so it is added back to net income in the operating activities section.

When Using the Indirect Method of Preparing the Statement of Cash