Goldman Company's Accounts Receivable decreased by $25,000 and its Accounts Payable increased by $12,000.What is the net effect on cash from operations under the indirect method?

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Quizplus · Accepted Answer

The indirect method adjusts net income to cash flow from operations by adding back non-cash expenses and subtracting non-cash gains. In this case, the decrease in Accounts Receivable represents an increase in cash, while the increase in Accounts Payable represents a decrease in cash. Therefore, the net effect on cash from operations is an increase of $25,000 - $12,000 = $13,000.

Goldman Company's Accounts Receivable Decreased by $25,000 and Its Accounts