Question

The following information is available from the current period financial statements:

Net income $175,000
Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000

The net cash flow from operating activities using the indirect method is?

Answer 1

Answer:

$166,000

Explanation:

The net cash flow from operating activities using the indirect method is computed below:

Cash flow from Operating activities - Indirect method

Net income $175,000

Adjustment made:

Add : Depreciation expense $28,000

Less: Increase in accounts receivable -$16,000

Less: Decrease in accounts payable -$21,000

Total of Adjustments -$9,000

Net Cash flow from Operating activities $166,000