Ross Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
$\begin{array}{c}
\text {Ross Corp.}\
\text {Comparative Balance Sheet}\
\text {December 31, 2017 and 2016}\\begin{array}{|l|r|r|r|}
\hline& 2017 & 2016 & \text { Increase/(Decrease) } \
\hline\text { Accounts Payable } & \$ 8,000 & \$ 9,000 & \$(1,000) \
\hline \text { Accrued Liabilities } & 3,000 & 1,500 & 1,500 \
\hline \text { Long-term Notes Payable } & \underline{56,00} & \underline{60,000} & \underline{(4,000)} \
\hline \text { Total Liabilities } & \$ 67,00 & \$ 70,500 & \$(3,500) \
\hline
\end{array}\end{array}$ The change in Accrued Liabilities is shown as a negative cash flow in the adjustments to net income.

Question

Ross Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
 $\begin{array}{c}
\text {Ross Corp.}\
\text {Comparative Balance Sheet}\
\text {December 31, 2017 and 2016}\\begin{array}{|l|r|r|r|}
\hline& 2017 & 2016 & \text { Increase/(Decrease) } \ 
\hline\text { Accounts Payable } & \$ 8,000 & \$ 9,000 & \$(1,000) \
\hline \text { Accrued Liabilities } & 3,000 & 1,500 & 1,500 \
\hline \text { Long-term Notes Payable } & \underline{56,00} & \underline{60,000} & \underline{(4,000)} \
\hline \text { Total Liabilities } & \$ 67,00 & \$ 70,500 & \$(3,500) \
\hline
\end{array}\end{array}$ The change in Accrued Liabilities is shown as a negative cash flow in the adjustments to net income.

Quizplus · Accepted Answer

The increase in Accrued Liabilities is shown as a positive cash flow in the adjustments to net income because it represents expenses that have been incurred but not yet paid, thus increasing cash flow.

Ross CorpUses the Indirect Method to Prepare the Statement of Cash