Ask Question
BusinessBusiness
8 November, 04:32

Laser World reports net income of $490,000. Depreciation expense is $34,000, accounts receivable increases $11,000, and accounts payable decreases $14,000. Calculate net cash flows from operating activities using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

+4
Answers (2)
  1. 8 November, 06:07
    0
    Net cash flows from operating activities is $499,000

    Explanation:

    Cash Flow from operating activities cash generated from to day to day activities of the business. All the cash flows needed to operate the business smoothly.

    Cash flows from operating activities

    Net Income $490,000

    Add: Non cash Expense Adjustments:

    Depreciation $34,000

    Change in Working Capital:

    Increase in accounts receivable $ (11,000)

    Decrease in accounts payable $ (14,000)

    Less: Net Change in WC $ (25,000)

    Net Operating Cash flow $499,000

    Depreciation is a non cash expense which was deducted from the income while calculating the net income value, it needs to be added back.

    Increase in the receivable means the customers are paying less than the credit sales are being made. It uses the cash so, it will be adjusted as a deduction in net cash flow calculation.

    Decrease in the payable means the suppliers are being paid more than the credit purchases are being made. It also uses the cash so, it will be adjusted as a deduction in net cash flow calculation.
  2. 8 November, 07:21
    0
    The net cash flows from operating activities using the indirect method is $499,000

    Explanation:

    In order to calculate the net cash flows from operating activities using the indirect method we would have to make the following calculation:

    net cash flows from operating activities=cash flows from operating activities+Adjustments to reconcile net income to net cash flows from operating activities

    net cash flows from operating activities=net income + (Depreciation expense-accounts receivable increases-accounts payable decreases

    net cash flows from operating activities=$490,000 + ($34,000-$11,000-$14,000)

    net cash flows from operating activities=$499,000

    The net cash flows from operating activities using the indirect method is $499,000
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Laser World reports net income of $490,000. Depreciation expense is $34,000, accounts receivable increases $11,000, and accounts payable ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Desrevisseau Inc., a manufacturing company, has provided the following data for the month of August. The balance in the Work in Process inventory account was $10,000 at the beginning of the month and $22,000 at the end of the month.
Answers (1)
Which of the following is not a question addressed by macroeconomists? a. Why is average income high in some nations but low in others? b. What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? c.
Answers (1)
One way communication with potential customers is called?
Answers (1)
Which is least like the others Bear, badger, elephant, hamster
Answers (1)
During the current year, Jules Company incurred the following product costs: Direct materials used in production $250,000; Direct labor $185,000; and Manufacturing overhead $245,500.
Answers (1)
New Questions in Business
A product will probably have a relatively high price if
No Answers
Oliver, a widower who does not live in a community property state, sold 50 acres of land he and his wife had paid $10,000 for in 1999. She died in 2009. As of the date of her death, the land was valued at $50,000 for estate tax purposes.
Answers (1)
What groups are especially hard hit by poverty?
Answers (1)
A production line at V. J. Sugumaran's machine shop has three stations. The first station can process a unit in 5 minutes.
Answers (1)
What is the marginal rate of substitution (MRS) and why does it diminish as the consumer substitutes one product for another?
Answers (1)
Home » Business » Laser World reports net income of $490,000. Depreciation expense is $34,000, accounts receivable increases $11,000, and accounts payable decreases $14,000. Calculate net cash flows from operating activities using the indirect method.
Sign Up Forgot Password?