From the following information, calculate net cash flow from operating activities. $$\begin{array}{l}
\begin{array} { l r r }
\text { Sales } & & \$ 185,000 \
\text { Less Salaries } & \$ 40,000 & \
\text { Depreciation } & \$ 13,000 & \
\text { Other expenses } & \$ 10,000 & \
\text { Interest expense } & \$ 5,000 & \$ 68,000 \
\text { Profit } & & \$ 117,000 \

\end{array}\\
\text { Statement of financial position extract }\
\begin{array} { l r r }
& \text { Start of } & \text { Endof } \
& \text { Period } & \text { Period } \
& \$ & \$ \
\text { Accounts payable } & 11,000 & 14,000 \
\text { Interest expense owing } & - & 1,000
\end{array}
\end{array}$$
A)$134,000.
B)$115,000.
C)$128,000.
D)$126,000.

Question

From the following information, calculate net cash flow from operating activities. $$\begin{array}{l}
\begin{array} { l r r } 
\text { Sales } & & \$ 185,000 \
\text { Less Salaries } & \$ 40,000 & \
\text { Depreciation } & \$ 13,000 & \
\text { Other expenses } & \$ 10,000 & \
\text { Interest expense } & \$ 5,000 & \$ 68,000 \
\text { Profit } & & \$ 117,000 \

\end{array}\\
\text { Statement of financial position extract }\
\begin{array} { l r r } 
& \text { Start of } & \text { Endof } \
& \text { Period } & \text { Period } \
& \$ & \$ \
\text { Accounts payable } & 11,000 & 14,000 \
\text { Interest expense owing } & - & 1,000
\end{array}
\end{array}$$
A)$134,000.
B)$115,000.
C)$128,000.
D)$126,000.

Quizplus · Accepted Answer

To calculate net cash flow from operating activities, we need to start with net income and adjust for non-cash expenses and changes in working capital.

Starting with net income of $110,000, we need to add back depreciation and amortization ($20,000) as these are non-cash expenses.

Next, we need to subtract the increase in accounts receivable ($6,000), add the increase in accounts payable ($16,000), and subtract the increase in inventory ($6,000).

Putting it all together: Net income + depreciation & amortization - increase in accounts receivable + increase in accounts payable - increase in inventory = $110,000 + $20,000 - $6,000 + $16,000 - $6,000 = $134,000.

Therefore, the best choice is A) $134,000 as it is the correct net cash flow from operating activities.

From the Following Information, Calculate Net Cash Flow from Operating