Answer:
Accounts Receivable would be deducted from net income and Accounts Payable would be added to net income.
Step-by-step explanation:
The statement of cash flows indicate the cash inflows and outflows for a company over a particular period of time from operating, investing, and financing activities.
Realization concept of accounting posits that revenue can only be recognized after it has been earned. Hence, an increase in Accounts Receivable would be deducted from net income and this will reduce the net income, in the same vein an increase in Accounts Payable would be added to net income.
It is pertinent to understand that revenue can be realized only when it is earned.
