Brighton,Inc. ,uses the indirect method to determine its net cash flows from operating activities.During the course of the year,the company's accounts receivable increased by $10,000 and its accounts payable decreased by $5,000.As a result of these two items,the calculation to determine cash flows from operating activities will be:
A)increased by $5,000.
B)decreased by $5,000.
C)increased by $15,000.
D)decreased by $15,000.

Question

Quizplus · Accepted Answer

An increase in accounts receivable and a decrease in accounts payable both reduce cash flows from operating activities. The net effect is a decrease of $15,000.