Operating activities: The items that are directly linked with the transactions that affect the net income of the company are termed as operating activities.
Direct method: It reports cash receipts and disbursements arising out of operating activities. Difference between these amounts helps us arrive at the net cash flows from operating activities.
(a) To find: To find net cash flow using direct method from the operating activities.
Given information: Revenues: $200,000
Operating expenses: $110,000
Accounts receivable: $71,000
Accounts payable: $29,000
(b) Given Information: COGS: $310,000.00
Operating Expense (Excl
Balance sheet shows the following: Increase in Inventory: $26,000.00
Decrease in Prepaid expense: $8,000.00
Decrease in accounts payable (related to merchandise): $17,000.00
Increase in accrued expense payable: $11,000.00
To find (a) cash payments to suppliers and (b) cash payments for operating expenses.
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