In preparing a statement of cash flows using the indirect method, an increase in an unearned revenue account should
A) be shown as a financing activity.
B) be shown as a deduction from net income in computing net cash flows from operating activities.
C) not be shown on the statement of cash flows.
D) be shown as an addition to net income in computing net cash flows from operating activities.

Question

Quizplus · Accepted Answer

An increase in unearned revenue indicates cash received before revenue is earned, which increases cash flow. Therefore, it is added to net income in the operating activities section.

In Preparing a Statement of Cash Flows Using the Indirect