The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin's accounts payable goes down: (see attachment for data)
- It is a use of cash, and will be shown in the operating section as a subtraction.
- It is a source of cash and will be shown in the financing section as an addition.
- It is a source of cash, and will be shown in the operating section as an addition.
- It is a use of cash, and will be shown in the financing section as a subtraction.
This solution shows how a decrease in payables is reported in the statement of cash flows.