Of the following,which has a positive effect on the computation of cash flow from operations using the indirect method?
A)Increase in Inventory
B)Decrease in Accounts Payable
C)Increase in Accounts Receivable
D)Decrease in Prepaid Insurance

Question

Quizplus · Accepted Answer

Decrease in Prepaid Insurance is considered a non-cash expense. When using the indirect method to compute cash flow from operations, non-cash expenses are added back to net income because they reduce net income on the income statement but do not affect the company's cash flow.

Of the Following,which Has a Positive Effect on the Computation