BlueCo. prepares its statement of cash flows using the indirect method. Blue’s bad debt allowance increased by $18,000 during the year and no accounts were written off. How should Blue report the change in its bad debt allowance in the statement of cash flows?

Multiple Choice

As a financing cash outflow.

As an addition to the net income in the operating activities section.

As an investing cash outflow.

As a subtraction from net income in the operating activities section.