Adjusting the net income of $577,700 for changes in operating assets and liabilities for Covington Corporation shows a net cash flow from operating activities of <u>$578,600</u>.
<h3>What is the net cash flow from operating activities?</h3>
The net cash flow from operating activities indicates the additional cash generated from operations.
This includes the net income, adjustments for noncash items, like depreciation, and changes in working capital.
The operating activities refer to the daily core business activities of an entity. Operating activities are distinguishable from financing and investing activities.
<h3>Data and Calculations:</h3>
Covington Corporation
<h3>Comparative Balance Sheet </h3>
Dec. 31, 2012 Dec. 31, 2011 Changes
Accounts receivable $19,300 $18,100 + $1,200
Inventory 58,100 58,800 - $700
Accounts payable 19,400 19,000 + $400
Dividends payable 18,000 17,000 + $1,000
<h3>Sources of Cash:</h3>
Inventory 700
Accounts payable 400
Dividends payable 1,000
<h3>Uses of Cash:</h3>
Accounts receivable 1,200
<h3>Operating Activities:</h3>
Net Income $577,700
Accounts receivable (1,200)
Inventory 700
Accounts payable 400
Dividends payable 1,000
Cash from operating
activities $578,600
Thus, Covington Corporation's net cash from operating activities increased by <u>$578,600</u>.
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<h3>Question Completion:</h3>
Covington Corporation's comparative balance sheet for current assets and liabilities was as follows:
Dec. 31, 2012 Dec. 31, 2011
Accounts receivable $19,300 $18,100
Inventory 58,100 58,800
Accounts payable 19,400 19,000
Dividends payable 18,000 17,000
Adjust net income of $577,700 for changes in operating assets and liabilities to arrive at net cash flow from operating activities.
