Computing Cash Flows from Operating Activities: Indirect Method During 2014, Ort

Question

Computing Cash Flows from Operating Activities: Indirect Method

During 2014, Ortega Corporation had net income of $82,000. Included on its income statement were depreciation expense of $4,600 and amortization expense of $600. During the year, Accounts Receivable increased by $6,800, Inventories decreased by $3,800, Prepaid Expenses decreased by $400, Accounts Payable increased by $10,000, and Accrued Liabilities decreased by $900.

Determine net cash flows from operating activities using the indirect method.

Explanation / Answer

Particulars Amount Net Income          82,000 ADD: Non Cash Expenses Depriciation            4,600 Amortization                600 Add: Decrease in Current assets Inventroies            3,800 Prepaid Expenses                400 Less: Increase in Current assets Accounts receivable          (6,800) Less: Decrease in Current Liabilities Accrued Liabilities             (900) Add: Increase in Current Liabilities Accounts payable          10,000 Net cash flow from operating activities          93,700

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