Wellington Company uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2015:
-On Wellington's statement of cash flows,using the direct method,what amount will be shown for total net cash flow from operating activities? (Assume Accrued Liabilities relate to Other Operating Expense.)

Question

Wellington Company uses the direct method to prepare its statement of cash flows.Refer to the following financial statement information for the year ended December 31,2015:   
-On Wellington's statement of cash flows,using the direct method,what amount will be shown for total net cash flow from operating activities? (Assume Accrued Liabilities relate to Other Operating Expense.)

Quizplus · Accepted Answer

The direct method calculates cash flows from operating activities by adjusting each item in the income statement from the accrual basis to the cash basis. The correct amount is $42,000, which represents the net cash inflow from operating activities after adjusting for changes in working capital and other non-cash items.

Wellington Company Uses the Direct Method to Prepare Its Statement