Question

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available:
Net income for the year was $52,000
Accounts payable increased by 18,000
Accounts receivable decreased by 25,000
Inventories increased by 5,000
Depreciation expense was 30,000
Net cash provided by operating activities was: ________
a) $80,000
b) $70,000
c) $130,000
d) $120,000
e) $60,000

Answer 1

Answer:

d) $120,000

Explanation:

Calculation to determine what Net cash provided by operating activities was:

CASH FLOWS FROM OPERATING ACTIVITIES $

Net Income 52,000

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation expense was 30,000

Increase Accounts Payable 18,000

Decrease Accounts Receivables 25,000

Less Increase in Inventory (5,000)

NET CASH PROVIDED BY OPERATING ACTIVITIES 120,000

Therefore Net cash provided by operating activities was:$120,000