Matching
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.
Premises:
Increase in Prepaid Expenses
Decrease in Accounts Payable
Increase in Accumulated Depreciation
Increase in Interest Payable
Decrease in Unearned Income
Increase in Long-Term Notes Payable
Decrease in Prepaid Insurance
Increase in Inventory
Increase in Accrued Expenses
Decrease in Accounts Receivable
Responses:
No adjustment necessary
Add item to related revenue or expense account balance
Subtract item from related revenue or expense account balance
Correct Answer:
Premises:
Responses:
Increase in Prepaid Expenses
Decrease in Accounts Payable
Increase in Accumulated Depreciation
Increase in Interest Payable
Decrease in Unearned Income
Increase in Long-Term Notes Payable
Decrease in Prepaid Insurance
Increase in Inventory
Increase in Accrued Expenses
Decrease in Accounts Receivable
Premises:
Increase in Prepaid Expenses
Decrease in Accounts Payable
Increase in Accumulated Depreciation
Increase in Interest Payable
Decrease in Unearned Income
Increase in Long-Term Notes Payable
Decrease in Prepaid Insurance
Increase in Inventory
Increase in Accrued Expenses
Decrease in Accounts Receivable
Responses:
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