Partial Statement of Cash Flows Year Ended November 30, 2010 Cash flows from ope
ID: 2498269 • Letter: P
Question
Partial Statement of Cash Flows Year Ended November 30, 2010 Cash flows from operating activities Net income $1,650,000 Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense 80,000 Increase in accounts receivable (300,000) Decrease in inventory 500,000 Increase in prepaid expenses (150,000) Decrease in accounts payable (350,000) Decrease in accrued expenses payable (100,000) Net cash flows from operating activities $1,330,000 A good way to remember how to handle the operating asses and liabilities is this: If an asset increases or decreases, the adjustment should be made in the OPPOSITE direction If a liability increases or decreases, the adjustment should be made in the SAME direction
Explanation / Answer
Solution:
Net Income 1,650,000 Add: Depreciation 80,000 Less: Increase in accounts receivables -300,000 Add: Decrease in inventory 500,000 Less: Increase in prepaid Expense -150,000 Less: Decrease in accounts payable -350,000 Less: Decrease in accured expenses -100,000 Net cash flow from operating activities 1,330,000