Under the indirect method,an increase in accounts payable is added to net income to arrive at net cash flows from operating activities.

Question

Quizplus · Accepted Answer

An increase in accounts payable indicates that expenses have been incurred but not yet paid in cash, which means cash was conserved, so it is added back to net income in the indirect method of calculating cash flows from operating activities.

Under the Indirect Method,an Increase in Accounts Payable Is Added