The Net Income Reported on the Income Statement for the Current

question 141

Short Answer

The net income reported on the income statement for the current year was $210,000.  Depreciation recorded on equipment and a building amount to $62,500 for the year.  Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows:
(a) Prepare the cash flows from operating activities section of the statement of cash flows, using the indirect method.
(b) If the direct method had been used, would the net cash flow from operating activities have been the same?  Explain.

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Definitions:

Inventory Cost Flow

A method used to value and manage inventory, determining the cost of goods sold and ending inventory.

Industry Standards

Established norms or criteria within an industry that act as benchmarks for quality, safety, and performance.

Domestic Operations

Business activities and transactions that occur within a company's home country.

FIFO

"First In, First Out," an inventory management and valuation method assuming the first items acquired are the first ones sold.