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8 February, 14:06

The comparative balance sheets of Friends, Inc. show a net increase in accounts receivable of $650 and a net decrease in inventory of $500. To determine net cash flow from operating activities under the indirect method, net income should be:

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  1. 8 February, 16:14
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    Net income would be decreased by $150

    Explanation:

    Given that

    Net increase in account receivable = $650

    Net decrease in inventory = $500

    So by considering the above information, the net income would be decreased by

    = Net decrease in inventory - Net increase in account receivable

    = $500 - $650

    = - $150

    And, the same is to be reported on the operating activities under the indirect method of the cash flow statement
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