Incorporated reports net income of $16,200. Its comparative balance sheet shows the following changes: accounts receivable increased $7,200; inventory decreased $9,200; prepaid insurance decreased $2,200; accounts payable increased $4,200; and taxes payable decreased $3,200. Compute cash flows from operations using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is