When preparing the statement of cash flows by the indirect method, if current liabilities increase the difference is a) deducted from net income. b) added to net income. c) subtracted from investments. d) added to investments

Added to net income ( B )

Explanation:

The preparation of the statement of cash flow can be done by two ways which are direct and indirect methods. in the direct methods the items on the income statement is converted on the basis of cash.

while in the indirect method of preparing statement of cash flow it starts with the registration of the accurred net income and adjusts the overall net income for changes that occur in assets and liabilities originally registered in the income statement. and also changes that occur in the income statement that involves items that might not affect the cash balance. this is done instead of changing the individual items in the net income as with the direct method.

hence the difference in the change observed based on the increase in  liabilities is added to the net income based on the definition of the indirect method.

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