Which of the following statements is CORRECT?
A) In the statement of cash flows,a decrease in accounts receivable is subtracted from net income in the operating activities section.
B) Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity,not an operating activity.
C) In the statement of cash flows,a decrease in accounts payable is subtracted from net income in the operating activities section.
D) In the statement of cash flows,depreciation is subtracted from net income in the operating activities section.
E) In the statement of cash flows,a decrease in inventories is subtracted from net income in the operating activities section.

Question

Quizplus · Accepted Answer

A decrease in accounts payable indicates that a company has paid off some of its liabilities, which means cash has flowed out of the business. In the operating activities section of the statement of cash flows, this decrease is subtracted from net income to adjust for the cash that was used.

Which of the Following Statements Is CORRECT