Question

To calculate the net cash flow in the operating section of the Statement of Cash Flows using the indirect method, a decrease in a current liability account should be ________ from net income.

Answer 1

Answer:

A decrease in a current liability account should be subtracted from net income.

Explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive to the amount of cash generated by operating activities.

It depends on the account if it is added or subtracted to net income. In case of a decrease in a current liability account should be subtracted from net income.