# Use the following excerpts from Indigo Company’s balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of \$225,000.

FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

Chapter
Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 16, Problem 6EB
Textbook Problem
6 views

## Use the following excerpts from Indigo Company’s balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of \$225,000.

To determine

Concept introduction:

Cash flows from operating activities:

Cash flow from operating activities section is the first section of the statement of cash flows. This section includes the cash activities relating to day to day operating business activities. For example: purchase or sale of inventory and payment of operating expenses.

(Note: Cash flows from operating activities can be prepared using direct or indirect method)

Under the indirect method the net cash flows from operating activities is calculated using the net income. To calculate the net operating cash flow, adjustments for changes in working capital, noncash items and non operating items are made in the net income.

To calculate:

The Net cash flow from operating activities using the indirect method.

### Explanation of Solution

The Net cash flow from operating activities using the indirect method is calculated as follows:

 Cash flow from operating activities: Year 2018 Net Income \$ 225,000 Less: Increase in Accounts Receivable (33000-31500)

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Find more solutions based on key concepts
What is the first step in preparing a master budget?

Survey of Accounting (Accounting I)

What is the purpose of a range check?

Accounting Information Systems

How should the capital structure weights used to calculate the WACC be determined?

Fundamentals of Financial Management (MindTap Course List)

Explain whether the following statement is true or false: Only weak companies issue debentures.

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Conciseness es valued in business. However, can messages be too short?

Essentials of Business Communication (MindTap Course List)