Question

Net income for the year was $45,500. accounts receivable increased $5,500, and account payable increased by $11,200. under the indirect method, the cash flow from operations is

Answer 1

The cash flow from operations is $51,200 ($45,500-$5,500+$11,200) under the indirect method. The indirect method is one of two methods which used for calculating the cash flow from operation amount. This method aims to eliminate the effect of accrual from company's net income in order to find cash basis income.