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Statement of Cash Flows - Indirect Method for Operating Activities The Indirect method reconciles net income to cash flow from operating activities by backing out
Statement of Cash Flows - Indirect Method for Operating Activities The Indirect method reconciles net income to cash flow from operating activities by backing out noncash flow items as well as items that are unrelated to operating activities such as gains and losses from sales of investments and retirement of debt. Given the following information, determine cash flow from operating activities using the indirect method: Net Income Increase in Accounts Receivable Decrease in Accounts Payable Decrease in Merchandise Inventory Depreciation Expense Debt classified as trading securities were purchased during the year. Unlike other purchases on investments, investments in trading securities are considered operating activities A gain on sale of investments in stock $400 was reported in the income statement Increase in Prepaid Insurance Decrease in Rent Received in Advance Net Cash Flow from Operating Activities Amounts 139,000 14,700 3,100 1,900 11,600 2,500 600 350 140 Cash Flow from Operating Activities
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