Question

When operating cash flows are calculated using the indirect method, if accrued liabilities decreased, then the change is ______ during the period.

Answer 1

When operating cash flows are calculated using the indirect method, if accrued liabilities decreased, then the change is deducted from net income because more cash was paid then expensed during the period.

A measure of the amount of money made by a company's regular business operations is called operating cash flow (OCF). Operating cash flow shows if a business can produce enough positive cash flow to support and expand its operations; if not, it may need outside finance for capital growth.

A financial obligation that a business accrues within a specific accounting period is known as an accrued liability. The company has not yet paid for the goods and services in that time period, even though they may have previously been provided. Additionally, they are not listed in the main ledger of the business.

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