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In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is ignored because it does not affect expenses. deducted from net income. added to net income. ignored because it does not affect income.

Respuesta :

mchaid015

Answer:

Deducted from net income

Explanation:

Under indirect method of calculating net cash flow in operating activities, net income reported is a result of measuring and recognizing revenues and expenses under accrual basis. In order for it to convert into cash basis, adjustment must be made to the net income as follows;

•INCREASE in current assets (these includes prepaid expenses) must be deducted from net income

•DECREASE in current assets must be added to net income

•INCREASE in current liabilities must be added to net income, and

•DECREASE in current liabilities must be deducted to net income

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