For the fiscal year that just ended, Crawford Inc. had total selling and administrative expenses of $90,000

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Question:

For the fiscal year that just ended, Crawford Inc. had total selling and administrative expenses of $90,000 including total depreciation expense of $45,000. Over the course of the year, the firm also experienced an increase in its prepaid expenses associated with the selling and administrative functions. If Crawford uses the direct method to prepare its statement of cash flows, it should adjust its accrual-based selling and administrative expenses by

A : deducting both the amount of the depreciation and the amount of the increase in prepaid expenses.

B : deducting the amount of the depreciation and adding the amount of the increase in prepaid expenses.

C : adding the amount of the depreciation and deducting the amount of the increase in prepaid expenses.

D : adding both the amount of the depreciation and the amount of the increase in prepaid expenses.