Question

When adjusting accrual earnings to obtain cash flows from operations, A. an increase in Accounts Payable is added to determine cash flow from operations. B. it is not necessary to consider any changes to Accounts Payable. C. an increase in Accounts Payable is deducted to determine cash flows from operations. D. a decrease in Accounts Payable is added to determine cash flow from operations.

Answer 1

Answer: A. an increase in Accounts Payable is added to determine cash flow from operations.

Explanation:

We should note that accounts payable refer to the amounts that the company pays to its suppliers, therefore the sum of the the total amount that's owed to the suppliers will be shown on the balance sheet of the company as accounts payable.

Therefore, when adjusting accrual earnings to obtain cash flows from operations, an increase in accounts payable is added to determine cash flow from operations.