Under the Indirect Method,an Increase in Prepaid Expenses Is Subtracted

question 25

True/False

Under the indirect method,an increase in prepaid expenses is subtracted from net income,because the cash prepayments exceed the related expenses.

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Definitions:

Cash

Physical money such as coins and banknotes, or a resource in bank accounts that is available for immediate withdrawal and use for payments.

Withdrawals

Money or other assets taken out of a business by its owner(s) for personal use.

Financial Position

refers to the status of the assets, liabilities, and equity of an entity at a particular point in time, as represented primarily through the balance sheet.

Date

In financial documents, it signifies the point in time when a transaction occurred or when a document was created.