Q45 When using the indirect method of preparing a statement of cash flows, how will a $23,500 increase in accounts payable affect net income in the operating activities section of the statement of cash flows and why a There will be no effect, as this is a non cash transaction entry b Increases in current liabilities are added to net income, so it will increase net cash by $23,500 c Increases in current liabilities are deducted from net income, so it will decrease net cash by $23,500 d There is no effect, as accounts receivable are on the balance sheet, not the income statement

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Question: Q45 When using the indirect method of preparing a statement of cash flows, how will a $23,500 increase in accounts payable affect net income in

Q45

When using the indirect method of preparing a statement of cash flows, how will a $23,500 increase in accounts payable affect net income in the operating activities section of the statement of cash flows and why?

There will be no effect, as this is a non-cash transaction/entry

Increases in current liabilities are added to net income, so it will increase net cash by $23,500

Increases in current liabilities are deducted from net income, so it will decrease net cash by $23,500

There is no effect, as accounts receivable are on the balance sheet, not the income statement

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