Garton Company Had Net Income of $195,000 in 2017

question 99

Essay

Garton Company had net income of $195,000 in 2017. Depreciation expense for the year is $50,000. During the year, Accounts Receivable increased $8,000 and Prepaid Expenses decreased $1,000. The company also sold equipment at a loss of $3,000.
Instructions
Calculate net cash flows from operating activities using the indirect method.

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Definitions:

Conservatism

An accounting principle that requires potentially uncertain expenses and liabilities to be recognized promptly, but revenues only when they are assured.

Accounting Principle

Fundamental guidelines or rules that govern financial accounting practices.

Cost Or Market

An accounting method used to value inventory or securities at the lower of either its original cost or its market value as of the reporting date.

LIFO Reserve

The difference between the cost of inventory calculated under the Last In, First Out method and the FIFO (First In, First Out) method.