|
Net Income
Net Income is adjusted to reconcile it into net cash by operating
activities
Increase in account receivables
Increase in account
payable
Net Cash provided by
operating activates
|
$36,000
$5000
|
$34,000
$31,000
$3000
|
The above
mentioned table shows that with the adjustments of accounts payable and
accounts receivables the net income is transformed into the net cash.
Now the cash
flow statement preparation by indirect method is as follows:-
Cash Flow
Statement by Indirect Method
|
Cash Flows from
operating activities
Net Income
Increase in account receivables
Increase in account payable
Net Cash by
operating activities
|
$36,000
$5000
|
$34,000
$31,000
$3000
|
|
Cash Flow from
Financing activities
Issuance of Common Stock
Payment of cash dividend
Net cash provided by Financing activities
Net Increase in Cash
January 1, 2007
December 31, 2007
|
$60,000
$14,000
|
$46,000
$49,000
$0
$49,000
|
