Cash Flows from Operating Activities-Indirect Method

question 63

Essay

Cash flows from operating activities-indirect method
In the computation of net cash from operating activities for 2013 by the indirect method, determine whether each of the following items would be added to profit for the year, deducted from profit for the year, or omitted from the computation. Indicate your answer by using the following symbols: + (added to profit for the year), - (deducted from profit for the year), or 0 (omitted from computation).
____ (a) A decrease in accounts payable to suppliers of merchandise during 2013.
____ (b) A loss recognized on the sale of office equipment during 2013.
____ (c) Depreciation expense for 2013.
____ (d) Dividends, declared at the end of last year, paid to shareholders during the current year.
____ (e) An increase in inventory levels during 2013.
____ (f) A decrease in accounts receivable from customers during 2013.

---

Definitions:

Future Value

The value of an investment at a specified point in the future, accounting for factors like interest rates and compounding.

Payment

The transfer of money, or its equivalent, from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Account Earning

The income generated from an investment or the revenue accrued from a bank account over a specific period.

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value.