Question

In determining net cash flow from operating activities, a decrease in accounts payable during a period ________. Group of answer choices requires a subtraction adjustment to net income under the indirect method does not require an adjustment under the indirect method requires an addition adjustment to net income under the indirect method does not require an adjustment under the direct method

Answer 1

The answer is A. requires a subtraction adjustment to net income under the indirect method

Step-by-step explanation:

Whether direct or indirect method of preparing cash flow, a decrease in accounts payable requires a subtraction adjustment to net income under the indirect method.

A decrease in accounts payable means a company is settling its obligation faster using cash while an increase in accounts payable means a firm is taking longer time to settle its obligations.