the net income reported on an income statement for the current year was $63,000. depreciation recorded on fixed assets for the year was $24,000. balances of the current asset and current liability accounts at the end and beginning of the year are listed below. prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. end beginning cash $65,000 $70,000 accounts receivable (net) 70,000 57,000 inventories 86,000 102,000 prepaid expenses 4,000 4,500 accounts payable (merchandise creditors) 51,000 58,000 cash dividends payable 4,500 6,500 salaries payable 6,000 7,500

The net amount of cash and cash equivalents coming into and going out of a business is referred to as cash flow. There are two approaches to prepare cash flows: directly or indirectly. Regardless of the approach used, the operating activities make up the majority of the cash flow statement that fluctuates. The operating operations under the indirect approach begin with the net income. Since depreciation, amortization, and impairment are non-cash items that are often not included in net income, they will be added back to the net income. Investment-related expenses include revenue from investments and profits from the sale of non-current assets. Additionally, changes in working capital (Inventory, trade payables, and trade receivables) are netted out, and the resulting value is also utilized to alter net income. This displays the operating activity's net income.

Cash flow from Operating Activities using indirect method start with;

Net income: $63,000

Add back depreciation: $24,000

Add/less profit/loss from sale of assets: $0,000

Changes in Working Capital

Increase or decrease trade receivable: $ 0,000

increase or decrease in inventory: $ 0,000

Increase or decrease in treaded payable: $ 0,000

Net cash flow from operating activities: $87,000

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