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Why is a decrease in prepaid expense recorded as source of cash in the cash flow statement?

April 26, 2017Business cash Cash flow expense Finance prepaid recorded source

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Why is a decrease in prepaid expense recorded as source of cash in the cash flow statement?

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A decrease in any asset (except Cash) is positive cash flow. A decrease in Prepaid Insurance means a charge (debit) was made to Insurance Expense, reducing Net Income, yet it did not require any Cash outlay. In that sense, it was positive Cash flow.