Using the indirect method (statement of cash flows),a decrease in current assets would:

Question

Quizplus · Accepted Answer

A decrease in current assets indicates that cash has been used less in operations, implying an outflow of cash was lower than expected based on net income alone. Therefore, it is added back to net income in the operating section of the cash flow statement to adjust for the fact that the decrease in current assets did not consume cash in the way net income suggests.

Using the Indirect Method (Statement of Cash Flows),a Decrease in Current