Given the following information for a recent financial period determine the net cash flow from operating activities. Use the indirect approach.
Accounts receivable decreased by $6000
Profit was $18 000
Depreciation was $2000
Prepaid expense decreased by $3000

Question

Quizplus · Accepted Answer

Using the indirect approach, start with the profit of $18,000. Adjust for non-cash items and changes in working capital: Add back depreciation ($2,000) since it's a non-cash expense. Decreases in accounts receivable ($6,000) and prepaid expenses ($3,000) are added back because they represent cash inflows (less cash tied up in receivables and prepaids). Therefore, the net cash flow from operating activities is $18,000 + $2,000 + $6,000 + $3,000 = $29,000.

Given the Following Information for a Recent Financial Period Determine