Question

Changes in Current Operating Assets and Liabilities—A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of past cash receipts and payments and all accruals of expected future cash receipts and payments.Indirect Method

Mohammed Corporation's comparative balance sheet for current assets and liabilities was as follows:

	Dec. 31, Year 2		Dec. 31, Year 1
Accounts receivable	$13,300		$16,000
Inventory	72,900		64,500
Accounts payable	34,800		29,000
Dividends payable	26,000		28,000

Adjust net income of $127,600 for changes in operating assets and liabilities to arrive at net The section of the statement of cash flows that reports the cash transactions affecting the determination of net income.cash flow from operating activities.

Answer 1

	Cash flows from operating activities:
	Net Income	$    1,27,600
Add:	Decrease in Accounts receivables ($16000 - $13300)	$          2,700
Less:	Increase in Inventory ($72900 - $64500)	$         -8,400
Add:	Increase in Accounts Payable ($34800 - $29000)	$          5,800
	Net cash provided by operating activities	$    1,27,700
	Note : Operating Activities did not include dividend payable