Posted: September 23rd, 2016

A decrease in the prepaid expenses account of $1,000 over the course of a year would be shown on the company’s statement of cash flows prepared under the indirect method as:

A decrease in the prepaid expenses account of $1,000 over the course of a year would be shown on the company’s statement of cash flows prepared under the indirect method as:
a. an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.
b. a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.
c. an addition of $1,000 under financing activities.
d. a deduction of $1,000 under financing activities.