CPA Study Group
How is the increase in Prepaid Insurance equivalent to subtracting that amount when working BACKWARDS from net income to calculate cash from operating activities?
If my operating cash for the year was $207, as the answer says, and I PAY OUT an extra $9 to increase my Prepaid Insurance by $9, as the problem states, that puts me at $198 cash for the year. Adding back the $6 for Salaries Payable puts me at $204 net income, not the $210 starting point stated.
Am I missing something here?