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    Suisse82's Avatar
    Suisse82 Posts: 4, Reputation: 1
    New Member
     
    #1

    Feb 20, 2013, 02:47 PM
    Indirect cash flow method
    Which one of the following items will not appear in the operating section of Patnode's 2005 indirect method cash flow statement?

    1. Deduct: increase in accounts receivable $3,000
    2. Add: decrease in accounts payable $1,000
    3. Add: increase in taxes payable $2,400
    4. Add: decrease inventories $6000



    Am not able to paste the balance sheet as a jpeg,
    AR in 2004-22000$ and in 2005 -25000$
    AP in 2004 -13000$ and in 2005 -12000$
    Tax Payable in 2004 7000$ and in 2005 9400$
    Inventories in 2004 18000$ and in 2005 12000$

    I assume the answer is either 2 or 4, please suggest the right answer.
    Dog1937's Avatar
    Dog1937 Posts: 14, Reputation: 1
    New Member
     
    #2

    Nov 4, 2013, 07:01 PM
    I also had a question regarding this one. I believe it is the second option however I am not sure. Any input..
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #3

    Nov 5, 2013, 06:27 AM
    1. Deduct: increase in accounts receivable $3,000 - correct, it is an outflow
    2. Add: decrease in accounts payable $1,000 - incorrect, it is an outflow
    3. Add: increase in taxes payable $2,400 - correct, it is an inflow
    4. Add: decrease inventories $6000 - incorrect, it is outflow

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