Question

ABC Company ended Year 1 with the following account balances: Cash 600, Common Stock 400, and Retained Earnings 200. The following transactions occurred during Year 2: Issued common stock for $19,000 cash. ABC borrowed an additional $11,000 from Chris Bank. ABC earned $9,000 of revenue on account. ABC incurred $4,000 of operating expenses on account. Cash collections of accounts receivables were $6,000. ABC provided additional services to customers for $1,000 cash. ABC purchased land for $14,000. ABC used $3,000 in cash to make a partial payment on its accounts payable. ABC declared and paid a $200 dividend to the stockholders On December 31 ABC had accrued salaries of $4,000. What is the net cash flow from operating activities shown on the statement of cash flows for the year ending December 31, Year 2?

Answer 1

Answer:

The appropriate answer will be "$7000". Below is that there is the clarification provided.  

Explanation:

The given values are:

Revenue,

= 9000

Expense,

= 4000

The net profit will be:

⇒  $Net \ profit = Revenue-expense$

When we place the approximate values in position, we get

⇒                     $=9000-4000$

⇒                     $=5000$

Now,

⇒  $Cash \ flow \ from \ operating \ activities= Net \ profit + Cash \ inflow \ from \ debtor - Cash \ expense - Cash \ paid \ to \ supplier$

⇒                                                        $= 5000 + 6000 - 1000 - 3000$

⇒                                                        $=7000$