Operating Activities: Indirect Method Video Lessons

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Problem: The balances of the current asset and current liability accounts at the beginning and end of the year are listed below. Determine if the balance increased or decreased and indicate whether each of the following would be added to or deducted from net income in determining the net cash flow from operating activities using the indirect method.                                         End of                      Beginning of             Increase         Add or                                           Year                       Year                         (Decrease)     Deduct a)Accounts receivable      74,000                   84,100 b)Prepaid expenses           5,100                     6,600 c)Accounts payable          39,400                   33,200 d)Salaries payable              5,000                     7,000

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Problem Details

The balances of the current asset and current liability accounts at the beginning and end of the year are listed below. Determine if the balance increased or decreased and indicate whether each of the following would be added to or deducted from net income in determining the net cash flow from operating activities using the indirect method.

                                        End of                      Beginning of             Increase         Add or
                                          Year                       Year                         (Decrease)     Deduct

a)Accounts receivable      74,000                   84,100

b)Prepaid expenses           5,100                     6,600

c)Accounts payable          39,400                   33,200

d)Salaries payable              5,000                     7,000

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