Net income for the year was $45,500. Accounts receivable increased by $5,500, and accounts payable increased by $11,200. Under the indirect method, the cash flow from operations is
A) $51,200
B) $45,500
C) $62,200
D) $28,800

Question

Quizplus · Accepted Answer

Under the indirect method, cash flow from operations is calculated by adjusting net income for changes in working capital. An increase in accounts receivable is subtracted ($5,500), and an increase in accounts payable is added ($11,200) to the net income ($45,500), resulting in $51,200.

Net Income for the Year Was $45,500