Suppose your company sells services of $310 in exchange for $200 cash and $110 on account. Depreciation of $130 relating to equipment also is recorded. 1. Calculate the amount that should be reported as net cash flow from operating activities. 2. Calculate the amount that should be reported as net income. 3. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).
Suppose your company sells services of $310 in exchange for $200 cash and $110 on account. Depreciation of $130 relating to equipment also is recorded. 1. Calculate the amount that should be reported as net cash flow from operating activities. 2. Calculate the amount that should be reported as net income. 3. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Suppose your company sells services of $310 in exchange for $200 cash and $110 on account. Depreciation of $130
relating to equipment also is recorded.
1. Calculate the amount that should be reported as net cash flow from operating activities.
2. Calculate the amount that should be reported as net income.
3. Show how the indirect method would convert net income (requirement 3) to net cash flow from operating
activities (requirement 2).
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