Answer:
Operating Cash flows refer to those that have to do with the day to day management of the business and result from the business's normal operations.
Increases in money owed are added to the balance as it means more money stayed with the company.
Increases in assets are deducted as it means money was spent on acquiring them.
Depreciation is added back as it is a non cash expense so also is the loss on sale of asset.
Net Operating Income $115,000
Add back:
Depreciation $6,000
Loss on sale of asset $1,000
Add:
Increase in Salaries Payable $15,000
Increase in Accounts Payable $25,000
Less:
Increase in Prepaid Rent ($24,000)
Increase in Inventory ($50,000)
Net Operating Cash-flows $88,000
