Asked by Vanessa Grossman on May 14, 2024
Verified
When preparing the operating activities section of the statement of cash flows using the indirect method,decreases in current liabilities are subtracted from net income.
Current Liabilities
Obligations or debts that a company is expected to pay off within a year, such as accounts payable and short-term loans.
Decreases
A reduction in quantity, size, or the overall level of an economic indicator or financial value.
- Acquire knowledge on how current liabilities and assets adjustments are treated in the indirect method.
Verified Answer
KM
Kidus MengesteabMay 16, 2024
Final Answer :
True
Explanation :
Decreases in current liabilities are considered a source of cash, and therefore are subtracted from net income in the operating activities section when using the indirect method.
Learning Objectives
- Acquire knowledge on how current liabilities and assets adjustments are treated in the indirect method.
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