Question

When preparing the statement of cash flows using the indirect method, and increase in accounts payable would appear as:

A. a decrease in the operating activities section

B. and increase in the operating activities section

C. a use of cash in the investing activities section

D. a source of cash in the investing activities section

Answer 1

An increase in accounts payable means the payment of vendors has been delayed which in turn means an inflow for the business as these will be no outflow

As accounts payable are core activities of a business, it is categorized as operating activities

So, as per above discussion, option B is the correct option