Asked by
Madison Janack
on Nov 18, 2024
Verified
Net income was $51,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $37,000.
Indirect Method
An approach used in cash flow statements to adjust net income for the effects of non-cash transactions to compute cash flow from operating activities.
Net Income
The total profit of a company after all expenses and taxes have been deducted from total revenues, indicating the net earnings attributable to shareholders.
Accumulated Depreciation
The total amount of depreciation expense that has been recorded for an asset since it was put into use.
- Gain insight into the changes made to net income when computing cash flows from operating activities by employing the indirect strategy.
Verified Answer
DJ
Learning Objectives
- Gain insight into the changes made to net income when computing cash flows from operating activities by employing the indirect strategy.