Question

Laser World reports net income of $620,000. Depreciation expense is $47,000, accounts receivable increases $11,000, and accounts payable decreases $27,000. Calculate net cash flows from operating activities using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

Answer:

$629,000  

Explanation:

The net cash flow from operating activities is the net income plus depreciation, minus the increase in accounts receivable as well as the decrease in accounts payable.

Net income is                               $620,000

depreciaton  expense                    $47,000

Increase in accounts receivable   ($11,000)

decrease in accounts payable     ($27,000)

Net cash flow from operations    $629,000  

The increase in accounts receivable denies the business of additional cash,hence it is deducted ,the same applies to increase in accounts payable