Question

During the last year of operations, Theta’s accounts receivable increased by $10,000, accounts payable increased by $5,000, and inventories decreased by $2,000. What is the total impact of these changes on the difference between profits and cash flow?

Answer 1

Answer:

$3,000

Explanation:

An increase in accounts receivable reduces cash flow by $10,000. An increase in accounts payable increases cash flow by $5,000. A decrease in inventory increases cash flow by $2,000. The total impact is a reduction in cash flow by $3,000.

A cash flow statement is a statement shows how changes in rn balance sheet and income statement affects cash and other cash equivalents.