Question

Fine Furniture Company had a net income of $50,000. Accounts receivable increased by $30,000; inventory decreased by $20,000; amounts payable increased by $4,000; and salaries payable decreased by $1,000. The amount of cash flow from continuing operating activities under the indirect method is

Answer 1

The amount of cash flow from continuing operating activities under the indirect method is $ 95,000.

Explanation:

The amount of cash flow from continuing operating activities under the indirect method can be calculated by adding

• Accounts receivable
• inventory decreased

into the net income

while the

• amounts payable
• salaries payable

are subtracted from the net income

so, our expression will be:

cash flow= Net income + Accounts receivable + inventory decreased -

amounts payable - salaries payable

= $50,000 + $30,000 + $20,000 - $4,000 - $1,000

= $ 95,000.

inventory decreased $20,000