When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.

a) true

b) false

Question

Business

Amaris Esparza

7 July, 23:58

When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.

a) true

b) false

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Answers (1)

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Rodney Parsons · Answer 1

b) false

Explanation:

Operating activities: It contains those transactions that affect the after-net income working capital. It would subtract the increase in current assets and a decline in current liabilities, while adding the reduction in current assets and a rise in current liabilities.

Therefore, the given statement is false.

When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.a) trueb) false

When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.

a) true

b) false