Match Each Item with the Correct Letter Below to Indicate

Match each item with the correct letter below to indicate how each revenue or expense account on the income statement is adjusted when using the direct method to determine net cash flow provided by operating activities.
Account Balance Change
_____ Increase in Accrued Expenses
_____ Decrease in Accounts Receivable
_____ Decrease in Unearned Income
_____ Increase in Prepaid Expenses
_____ Decrease in Accounts Payable
_____ Increase in Long-Term Notes Payable
_____ Decrease in Prepaid Insurance
_____ Increase in Inventory
_____ Increase in Interest Payable
_____ Increase in Accumulated Depreciation
Type of Adjustment
A - Add item to related revenue or expense account balance
S - Subtract item from related revenue or expense account balance
N - No adjustment necessary

Correct Answer:

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S, A, S, A...

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