Question

Changes in Current Operating Assets and Liabilities-Indirect Method Victor Corporation's comparative balance sheet for current assets and liabilities was as follows: Dec. 31, Year 2 Dec. 31, Year 1 Accounts receivable $18,600 $17,300 Inventory 52,400 53,100 Accounts payable 10,700 9,000 Dividends payable 16,000 15,000 Adjust net income of $70,200 for changes in operating assets and liabilities to arrive at net cash flow from operating activities. Feedback

Answer 1

Net cash flow from operating activities

Net income	70,200
Adjustment of net income for changes in operating assets and liabilities
Increase in accounts receivable ( 18,600- 17,300)	(1,300)
Decrease in Inventory (52,400- 53,100)	700
Increase in account payable (10,700 - 9,000)	1,700
Net cash flow from operating activities	71,300

Dividends payable is not considered in operating activities only dividend paid in cash should be shown in financing activities.