Use the following income statement and information about changes in non-cash current assets and current liabilities to

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Use the following income statement and information about changes in non-cash current assets and current liabilities to present the cash flows from operating activities using the direct method:

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Changes in current asset and current liability accounts during the year were as follows:

Accounts receivable .................................... $10,800 increaseMerchandise inventory ................................... 7,200 increaseAccounts payable............................................ 3,600 decreaseSalaries payable .............................................. 1,200 decrease

Analysis Component: Use the information above to present the cash flows from operating activities using the indirect method. Explain the differences and similarities between the direct and indirect methods.

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Fundamental Accounting Principles Volume II

ISBN: 978-1260305838

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

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