In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is
A) deducted from profit.
B) added to profit.
C) ignored because it does not affect profit.
D) ignored because it does not affect expenses.

Question

Quizplus · Accepted Answer

An increase in prepaid expenses during a period is deducted from profit when calculating net cash provided by operating activities using the indirect method. This is because the increase represents cash outflow that does not affect the current period's income statement.

In Calculating Net Cash Provided by Operating Activities Using the Indirect