Avatar Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
- How will the change in Accounts Payable be shown on the statement of cash flows?

Question

Avatar Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: 
- How will the change in Accounts Payable be shown on the statement of cash flows?

Quizplus · Accepted Answer

The change in Accounts Payable will be shown as a deduction from Net Income on the statement of cash flows. This is because an increase in Accounts Payable represents an increase in non-cash expenses, which have already been deducted from Net Income to arrive at the net income figure. To convert this figure into cash from operating activities, the increase in Accounts Payable must be deducted from Net Income.

Avatar Auto Parts Company Uses the Indirect Method to Prepare