Question

Beta Electronics earned net income of $29,000. Included in the net income was $3,000 of depreciation expense. Current assets decreased by $2,000 and current liabilities increased by 4,000. There was also a loss on the sale of a plant asset of $8,000. How much cash is provided by operating activities?

Answer 1

While taking out net cash flow (operating activity ) we will use -

= Net income + depreciation expenses or amortization expenses + working capital changes + loss on sale of assets - gain on sale of assets

In working capital changes - increase in current assets would be subtracted.

                                               increase in current liability would be added

                                               decrease in current asset would be added

                                               decrease in current liability would be subtracted

As per question -

= $29,000 + $3000 + $2000 + $4000 + $8000

= $ 46,000