Asked by Alicia Gregory on Jul 01, 2024
Verified
Accounts receivable from sales to customers amounted to $40,000 and $32,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is
A) $118,000
B) $110,000
C) $102,000
D) $150,000
Accounts Receivable
Money owed to a business by its customers for goods or services delivered on credit.
Indirect Method
Indirect Method is a way of reporting cash flows from operating activities in the cash flow statement by starting with net income and adjusting for non-cash transactions and changes in working capital.
Operating Activities
Activities that involve the primary, day-to-day operations of a business, such as sales, supply chain management, and general administrative tasks.
- Acquaint yourself with the process of calculating net cash flow from operating activities employing the indirect approach.
- Apply the indirect procedure to estimate cash flows from operating activities, factoring in modifications in current assets and liabilities.
Verified Answer
Learning Objectives
- Acquaint yourself with the process of calculating net cash flow from operating activities employing the indirect approach.
- Apply the indirect procedure to estimate cash flows from operating activities, factoring in modifications in current assets and liabilities.
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