Suppose your company sells services of $310 in exchange for $200 cash and $110 on account. Depreciation of $130 relating to equipment also is recorded.Calculate the amount that should be reported as net cash flow from operating activities.Calculate the amount that should be reported as net income.Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

Cash flow from operating activities includes all the cash receipts and cash payments which are…

Answered: Suppose your company sells services of…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 40E

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Suppose your company sells services of $310 in exchange for $200 cash and $110 on account. Depreciation of $130 relating to equipment also is recorded.

Calculate the amount that should be reported as net cash flow from operating activities.
Calculate the amount that should be reported as net income.
Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).

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