Question

Laser World reports net income of $640,000. Depreciation expense is $49,000, accounts receivable increases $10,000, and accounts payable decreases $29,000. Calculate net cash flows from operating activities using the indirect method.

Answer 1

Answer:

$650,000

Explanation:

The computation of net cash flows from operating activities using the indirect method is shown below:-

Cash Flows from Operating Activities

Net income $640,000

Adjustment made

Add: Depreciation expense $49,000

Less: Increase in accounts receivable ($10,000)

Less: Decrease in accounts payable ($29,000)

Net cash flows from operating activities $650,000

The positive amount reflects the cash inflow and the negative amount reflects the cash outflow