A cash flow statement that is prepared under the indirect method adds and subtracts certain items to the base number.How would decreases in unearned revenues be shown? They would be shown as
A)a deduction from net income
B)an addition to net income
C)a deduction from sales
D)an addition to sales

Question

Quizplus · Accepted Answer

Decreases in unearned revenues would be shown as a deduction from net income under the indirect method of preparing a cash flow statement. This is because unearned revenues represent cash that has been received but has not yet been earned, so a decrease in unearned revenues means that some of this cash has now been earned and should be included in the calculation of net income.

A Cash Flow Statement That Is Prepared Under the Indirect