Final answer:
The correct answer is option A. In the statement of cash flows prepared using the T-account approach, increases in dividends payable (Option A) would be found on the credit side of the operating activities section, as this indicates that cash has not left the company and therefore increases cash flow.
Step-by-step explanation:
Understanding the Statement of Cash Flows and T-Accounts
When preparing the statement of cash flows using the T-account approach, the focus is on identifying the changes in cash due to operating, investing, and financing activities. Specifically, for operating activities, we consider transactions that affect the company's net income. On the credit side of the operating activities section of the T-account, we'd find entries that either increase cash coming in or decrease cash going out. Such an entry is an increase in a liability or a decrease in an asset, excluding short-term debt that is considered financing.
The correct option that would be found on the credit side of the operating activities section is increases in dividends payable. This represents money that the company owes, but hasn't yet paid out, which implies that cash has not left the company, and therefore is a positive adjustment in the cash flow statement. On the other hand, an increase in common stock is related to financing activities, an increase in accrued expenses is indeed part of operating activities and is similar to increases in dividends payable, but it is already accounted for and does not result in an adjustment to the T-account in this specific context. Lastly, increases in accounts receivable are a decrease to cash (as it means sales were made on credit) and would go on the debit side of the operating activities section.
To sum up, Option A, increases in dividends payable, is the correct answer as it would be found on the credit side of the operating activities section of the single, large T-account representing the changes in cash.