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STATEMENT OF CASH FLOWS:  REPORTING THE EFFECTS OF OPERATING, INVESTING, AND FINANCING ACTIVITIES ON CASH FLOWS   T4-X

4.18(Information Technologies; calculating and interpreting cash flow from operations.)

a.Net Income$312a

Additions:

Depreciation Expense114

Decrease in Accounts Receivable778

Decrease In Inventories76

Decrease in Prepayments102

Increase in Accounts Payable90

Subtraction:

Decrease in Other Current Liabilities(242)

Cash Flow from Operations$1,230

a$312 = $14,508 – $114 – $210 – $13,872.

b.Information Technologies decreased its noncash current assets, particularly accounts receivable, generating positive cash flows.  Although it repaid other current liabilities, the reduction in accounts receivable dominated and caused cash flow from operations to exceed net income.

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