Last year Burch Corporation's cash account decreased by $6,000.Net cash provided by (used in) investing activities was $13,000.Net cash provided by (used in) financing activities was $(30,000) .On the statement of cash flows, the net cash provided by (used in) operating activities was:

A) $(23,000)
B) $(17,000)
C) $(6,000)
D) $11,000

Question

Kienaz Ferguson · Accepted Answer

Final Answer : D, Explanation :  To find the net cash provided by operating activities, we need to use the formula:Net Cash Flow from Operating Activities = Net Income + Depreciation and Amortization +/- Changes in Working CapitalSince no information is given about net income or depreciation and amortization, we can assume they are not provided in the statement of cash flows. Therefore, we need to use the indirect method to calculate the net cash provided by operating activities.The indirect method adjusts net income for non-cash items and changes in working capital. However, we are not given information about changes in working capital either.Therefore, the only other option is to use the direct method, which is less common and is only used when the information is available in the financial statements.Since we are not given any information about operating activities specifically, we cannot calculate the net cash provided by operating activities.However, we can use the information given to determine that Burch Corporation had a net decrease of $23,000 in cash for the year ($6,000 decrease in cash from operations + $13,000 cash used in investing activities + $30,000 cash used in financing activities). Net change in cash and cash equivalents = Net cash provided by (used in)operating activities + Net cash provided by (used in)investing activities + Net cash provided by (used in)financing activities-$6,000 = Net cash provided by (used in)operating activities + $13,000 - $30,000Net cash provided by (used in)operating activities = -$6,000 - $13,000 + $30,000 = $11,000

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