Dallas Company uses the indirect method of preparing the statement of cash flows and has the following current liabilities at the beginning of the period: Accounts Payable, $35,000; Taxes Payable, $15,000 . At the end of the period, the balances of the
account are as follows: Accounts Payable, $25,000; Taxes Payable, $20,000 . What amounts will appear in the cash flow statement? In what category of the statement will they appear?
The amounts appearing in the cash flow statement should be in the Operating Activities category of the statement. The amounts shown should be the changes in the balances of the accounts.
Accounts Payable decreased by $10,000 and should appear as a decrease in the cash flow statement. Taxes Payable increased by $5,000 and should appear as an increase in the cash flow statement.
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