In Wallace Company, net income is $260,000. If accounts receivable increased $140,000 and accounts payable decreased $40,000, net cash provided by operating activities using the indirect method is:
A) $80,000.
B) $160,000.
C) $360,000.
D) $440,000.

Question

Quizplus · Accepted Answer

To calculate net cash provided by operating activities using the indirect method, start with net income and adjust for changes in working capital. Net income is $260,000. An increase in accounts receivable of $140,000 is subtracted, and a decrease in accounts payable of $40,000 is also subtracted. Therefore, $260,000 - $140,000 - $40,000 = $80,000.

In Wallace Company, Net Income Is $260,000