Caesario Company's Accounts Receivable increased by $39,000 and their Accounts Payable decreased by $19,000. What is the net effect on cash from operations under the indirect method?

Question

Quizplus · Accepted Answer

Under the indirect method, an increase in accounts receivable is subtracted from net income to arrive at cash from operations, while a decrease in accounts payable is added to net income. Therefore, the net effect on cash from operations is: -$39,000 + $19,000 = -$20,000.

Caesario Company's Accounts Receivable Increased by $39,000 and Their Accounts