TLR Productions' Accounts Receivable increased by $48,000 and its Accounts Payable increased by $27,000.What is the net effect on cash from operations under the indirect method?

Question

Quizplus · Accepted Answer

Under the indirect method of cash flow calculation, an increase in accounts receivable is considered a decrease in cash from operations and an increase in accounts payable is considered an increase in cash from operations.

Therefore, the net effect on cash from operations is:

Accounts Receivable increase: -$48,000
Accounts Payable increase: +$27,000

Net effect on Cash from Operations: -$21,000 (Decrease in cash from operations)

TLR Productions' Accounts Receivable Increased by $48,000 and Its Accounts