Assume the direct method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Payable-indicate the effect on cash payments for purchases by choosing one of the following:

Question

Quizplus · Accepted Answer

A decrease in accounts payable indicates that more cash was used to pay off liabilities, so it should be added to the cost of goods sold to determine the cash payments for purchases.

Assume the Direct Method Is Used to Compute Net Cash