The data given below are from the accounting records of the Kuhn Corporation: Based on this information, the net cash provided by operating activities using the indirect method would be:
A)$55,000
B)$58,000
C)$50,000
D)$60,000

Question

The data given below are from the accounting records of the Kuhn Corporation:  Based on this information, the net cash provided by operating activities using the indirect method would be:
A)$55,000 
B)$58,000 
C)$50,000 
D)$60,000

Quizplus · Accepted Answer

The net cash provided by operating activities using the indirect method is calculated by adjusting net income for the changes in current assets and liabilities.

Net income = $40,000 
Add: Depreciation expense = $20,000 
Less: Increase in accounts receivable = $5,000 
Add: Increase in accounts payable = $5,000 
Add: Increase in salaries payable = $5,000

Net cash provided by operating activities = $40,000 + $20,000 - $5,000 + $5,000 +$5,000 = $50,000.

Therefore, the correct answer is C.

The Data Given Below Are from the Accounting Records of the Kuhn