Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 33

Cash flows from operating activities-indirect method
The net income reported on the income statement for the current year was $320,000. Depreciation recorded on equipment and a building amounted to $96,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:

a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method.
b. If the direct method had been used, would the net cash flow from operating activities have been the same Explain.