Asked by
Michelle Gifford
on Nov 13, 2024
Verified
A company had net income of $252,000. Depreciation expense was $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
A) $217,000
B) $224,000
C) $284,000
D) $305,000
Depreciation Expense
The allocation of the cost of a tangible asset over its service life, representing how much of an asset's value has been used up over time.
Accounts Receivable
Unpaid amounts from customers for goods or services that a business has already provided.
Net Income
The total earnings of a company after subtracting all expenses, taxes, and costs from total revenue.
- Master the application of the indirect approach for the calculation of net cash flow originating from operating activities.
- Assess the net cash inflow or expenditure in business operations by leveraging the indirect method.
- Acquire knowledge on the effect of non-operating components, such as gains and losses, in calculating net cash flow.
Verified Answer
MS
Learning Objectives
- Master the application of the indirect approach for the calculation of net cash flow originating from operating activities.
- Assess the net cash inflow or expenditure in business operations by leveraging the indirect method.
- Acquire knowledge on the effect of non-operating components, such as gains and losses, in calculating net cash flow.