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Old 04-05-2012, 11:05 AM   #1 (permalink)
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Default Trying To Find Net Cash Flow?

A house painting business had revenues of $16,000 and expenses of $9,000. There were no depreciation expenses. However, the business reported the following changes in working capital:



A/R Beg Bal=1200 End Bal=4500
A/P Beg Bal=700 End Bal=300
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Old 04-05-2012, 11:05 AM   #2 (permalink)
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Default Trying To Find Net Cash Flow?

Rev :16000
Less Expenses -9000
Change in A/R : -3300 <You subtract this because this is the amount you have not yet received Cash from your sales>
Change in A/P:+( -400) <You subtract this too because you have overpaid your creditors compared to last year, generally you would add this to your cash but since last years balance is more than this years balance you minus it>

ans: 3600
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