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What does the accounts payable line on the cash flow statement mean?
To calculate the accounts payable adjustment amount, subtract the accounts payable entry on the balance sheet for the previous period from the accounts payable entry on the balance sheet for the current period. Here is why: Let's say, for example, that at the end of the previous period, you owed suppliers $5,000. Currently, you owe them $20,000. You need to add $15,000 to the cash from operating activities on the cash flow statement. On the other hand, if at the end of the previous period, you owed suppliers $20,000, and currently you owe them only $5,000, you would subtract $15,000 from the cash from operating activities to reflect the fact that you recently paid them $15,000. Notice that none of this is reflected on the income statement.
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