Which statement regarding the statement of cash flows is true?

Question

Quizplus · Accepted Answer

A decrease in accounts payable means that less cash was paid to suppliers, which is reported as a use of cash in the statement of cash flows. Option A is incorrect because a decrease in accounts receivable means that cash was collected, which is reported as a source of cash. Option C is incorrect because depreciation is a non-cash expense and is added back to net income in the operating activities section of the statement of cash flows. Option D is incorrect because a decrease in inventories means that less cash was tied up in inventory, which is reported as a source of cash.

Which Statement Regarding the Statement of Cash Flows Is True