The Vintage Boutique had net income of $53,000. Accounts Receivable increased by $28,000; inventory decreased by $18,000; accounts payable increased by $4,000 and salaries payable decreased by $1,200. The amount of cash flow from operating activities under the indirect method is:

Question

Quizplus · Accepted Answer

Cash flow from operating activities can be calculated using the indirect method by adjusting net income for changes in operating working capital accounts. Therefore, cash flow from operating activities for The Vintage Boutique can be calculated as follows:
Net Income $53,000
Add: Decrease in inventory $18,000
Add: Increase in accounts payable $4,000
Add: Decrease in salaries payable $1,200
Subtract: Increase in accounts receivable ($28,000)
Cash flow from operating activities $45,800. Therefore, the correct answer is B)$45,800.

The Vintage Boutique Had Net Income of $53,000