In calculating net cash provided by operating activities using the indirect method, an increase in prepaid expenses during a period is

A) deducted from net income.
B) added to net income.
C) ignored because it does not affect net income.
D) ignored because it does not affect expenses.

Prepaid Expenses

Costs paid for in advance of receiving the benefit of the service or product, recorded as an asset on the balance sheet until the expense is incurred.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Operating Activities

Activities directly related to the daily business operations, including cash generated from the core business as well as cash used.