Enterprise Industries' Accounts Receivable decreased by $30,000 and its Accounts Payable decreased by $16,000.What is the net effect on cash from operations under the indirect method?

Question

Quizplus · Accepted Answer

Under the indirect method, changes in accounts receivable and accounts payable are both added back to net income to calculate cash flow from operations. 
Therefore, the net effect on cash from operations is:
+$30,000 (decrease in Accounts Receivable)
-$16,000 (decrease in Accounts Payable)
= +$14,000. 
Thus, the correct answer is D: +$14,000.

Enterprise Industries' Accounts Receivable Decreased by $30,000 and Its Accounts