During the year the balance in the prepaid expenses account increased by $6,000. In order to...

 

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During the year the balance in the prepaid expenses account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to: a) Deduct the $6,000 from the operating expenses reported on the income statement. b) Add the $6,000 to the operating expenses reported on the income statement. c) Deduct the $6,000 from the cost of goods sold reported on the income statement. d) Add the $6,000 to the cost of goods sold reported on the income statement. During the year the balance in the prepaid expenses account increased by $6,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to: a) Deduct the $6,000 from the operating expenses reported on the income statement. b) Add the $6,000 to the operating expenses reported on the income statement. c) Deduct the $6,000 from the cost of goods sold reported on the income statement. d) Add the $6,000 to the cost of goods sold reported on the income statement.

Answer rating: 100% (QA)

Answer B Add the 6000 to the selling Administra... View the full answer