Answer:
Wildhorse Co.
Operating activities section of the Statement of Cash Flows for 2017, using the indirect method:
Net Income = $176,240
Add Depreciation = $34,330
Add Loss on Plant Disposal = $4,840
Less Increase in accounts receivable = $13,520
Add increase in accounts payable = $16,200
Less increase in prepaid expenses = $3,990
Net cash flow from operating activities = $214,100
Explanation:
The Statement of Cash Flows is one of the three major financial statements that an entity prepares periodically. It shows the sources the entity generated cash flows from and the means it spent the cash flows. This statement has three sections: the operating activities section, the financing section, and the investment section.
The operating section shows the cash inflows and outflows from the entity's ordinary business operations.
The financing section shows the sources of funding and their repayment.
The investing section shows the resources acquired and their disposal.
For the operating activities section, using the indirect method as against the direct method, the net income is adjusted for non-cash expenses like Depreciation, Amortization, Loss on Asset Disposal, etc.
The cash flows from the operating activities section also reflects changes in working capital with a positive change in assets from one period to the next recorded as a cash outflow, while a positive change in liabilities is recorded as a cash inflow, and vice versa.
According to investopedia.com, "Inventories, accounts receivable, tax assets, accrued revenue, and deferred revenue are common examples of assets for which a change in value will be reflected in cash flow from operating activities.
Accounts payable, tax liabilities, and accrued expenses are common examples of liabilities for which a change in value is reflected in cash flow from operations."
