if Gilliam Industries reports $6.4 million in revenue for a certain accounting period. which will result in a $47,000 reduction in cash flows from operational activities.
To account for these items, the cash flows from operating operations should be modified by: Gilliam will have to make the necessary adjustments for the change in Accounts Receivable using the indirect method, which will result in a $47,000 reduction in cash flows from operational activities.
The amount of net income must be adjusted to account for operating items that typically affect net income alone when calculating cash flow from operating activities using the indirect method.
Gilliam will need to make adjustments for the change in accounts receivable based on the information provided, which will result in a $47,000 drop in cash flows from operational activities.
Using this formula to find the change in account receivable
Change in account receivable = Beginning balance - Ending balance
Change in account receivable = $392,000 − $439,000
Change in account receivable = -$47,000
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