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?
A)as an addition to Net Income
B)as a deduction from Net Income
C)as a deduction from investing cash flows
D)as an addition to operating 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?
A)as an addition to Net Income 
B)as a deduction from Net Income 
C)as a deduction from investing cash flows 
D)as an addition to operating 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, as it represents an increase in unpaid expenses that were included in the calculation of Net Income but did not result in actual cash outflows during the period. This adjustment is necessary to reconcile Net Income to the actual cash flows from operating activities.

Avatar Auto Parts Company Uses the Indirect Method to Prepare