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gilliam industries records revenue of $6.4 million for an accounting period. in that same accounting period, they have a beginning balance of $392,000 and an ending balance of $439,000 in the accounts receivable account. how should the cash flows from operating activities be adjusted to account for these items? why? assume gilliam uses the indirect method.

Respuesta :

By employing the indirect method, Gilliam will only need to make the necessary adjustments to account for the change in accounts receivable, which will reduce cash flows from operating operations by $47,000.

An indirect method is what?

Gilliam computes the following using the indirect method:

Record sales totaled $6.4 million.

Balance at the start =$392,000. Balance at the conclusion = $439,000.

=$47,000 must be added to the cash flow to account for the items.

One of two accounting techniques that are used to produce a cash flow statement is referred to as the indirect method. This approach makes use of changes in balance sheet line items. Additionally, it changes the cash method of accounting from the accrual method in the operating section of the cash flow statement.

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