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Net income for the year was $29,500. Accounts receivable increased $2,500, and accounts payable increased $5,400. There were no other changes in noncash current assets and liabilities. Under the indirect method, the cash flow from operations is $32,400. True False

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Answer:

True.

Explanation:

According to the indirect method of cash flow statement, we will add net changes in working capital with net income and non-cash items.

Net income for the year                                $29,500

Cash flow from operation:

Add: Accounts receivable increased            ($2,500)

Accounts payable increased                          $5,400

Cash flow provided by operating activities = $32,400

Therefore, the statement is true.

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