The most recent comparative balance sheet of Giacomelli Corporation appears below: The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows?
A)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
B)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income
C)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
D)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

Question

The most recent comparative balance sheet of Giacomelli Corporation appears below:  The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows?
A)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income 
B)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income 
C)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income 
D)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

Quizplus · Accepted Answer

The Answer of The most recent comparative balance sheet of Giacomelli Corporation appears below:  The company uses the indirect method to construct the operating activities section of its statements of cash flows. Which of the following is correct regarding the operating activities section of the statement of cash flows?
A)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income 
B)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income 
C)The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income 
D)The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

The Most Recent Comparative Balance Sheet of Giacomelli Corporation Appears