During the Year the Balance in the Accrued Liabilities Account

Multiple Choice

During the year the balance in the accrued liabilities account increased by $12,000. In order to adjust the company's net income to a cash basis using the direct method on the statement of cash flows, it would be necessary to:

A) deduct the $12,000 from the operating expenses on the income statement.
B) add the $12,000 to the operating expenses on the income statement.
C) deduct the $12,000 from the cost of goods sold reported on the income statement.
D) add the $12,000 to the cost of goods sold reported on the income statement.