An increase in accounts payable represents an increase in net cash provided by operating activities just like borrowing money from a bank.An increase in accounts payable has an effect similar to taking out a new bank loan.However,these two items show up in different sections of the statement of cash flows to reflect the difference between operating and financing activities.

Question

Quizplus · Accepted Answer

An increase in accounts payable represents an increase in net cash provided by operating activities, and it is similar to borrowing money from a bank. However, these two items appear in different sections on the statement of cash flows because they reflect different types of activities - operating versus financing.

An Increase in Accounts Payable Represents an Increase in Net