When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.
a) true
b) false

Operating activities: It contains those transactions that affect the after-net income working capital. It would subtract the increase in current assets and a decline in current liabilities, while adding the reduction in current assets and a rise in current liabilities.

Therefore, the given statement is false.

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Parrain Parrain · Answer 2 · 2021-12-07T12:45:56+01:00

To say that a decrease in current liabilities is added to net income to arrive at net cash by operating activities is FALSE

When there is a decrease in current liabilities:

It is assumed that cash was used to pay off the liabilities
Cash must have reduced as it flowed to the liabilities

Because cash has reduced as a result of this, that cash should be deducted from net income and not added so as to reach the net cash provided by operating activities.

In conclusion, this statement is false.

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When preparing the statement of cash flows using the indirect​ method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities. a) true b) false

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When preparing the statement of cash flows using the indirect method, a decrease in current liabilities is added to the net income to arrive at net cash provided by operating activities.
a) true
b) false