Question

Which of the following statements is CORRECT? a. In the statement of cash flows, depreciation is subtracted from net income in the operating activities section. b. Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity. c. In the statement of cash flows, a decrease in accounts receivable is subtracted from net income in the operating activities section. d. In the statement of cash flows, a decrease in accounts payable is subtracted from net income in the operating activities section. e. In the statement of cash flows, a decrease in inventories is subtracted from net income in the operating activities section.

Answer 1

Answer:

d. In the statement of cash flows, a decrease in accounts payable is subtracted from net income in the operating activities section.

Explanation:

The depreciation is a non-cash expense so it would be added back to the operating activities. The dividend is shown in the financing activity in a negative sign. The decrease in the current asset would be added to the operating activities and vice versa

And, the decrease in current liabilities would be deducted to the operating activities

Therefore the option d is correct