Under the indirect method,a decrease in accounts payable is added to net income to arrive at net cash flows from operating activities.We would subtract a decrease in accounts payable from net income to arrive at net cash flows from operating activities under the indirect method.

Question

Quizplus · Accepted Answer

Under the indirect method, a decrease in accounts payable is considered a source of cash, and therefore, it would be added to net income to arrive at net cash flows from operating activities. Similarly, an increase in accounts payable would be considered a use of cash and would be subtracted from net income.

Under the Indirect Method,a Decrease in Accounts Payable Is Added