Matlock Company reported total sales revenue of $55,000 and total expenses amounting to $45,000 on its income statement for the year ended December 31, 20B. During 20B, trade receivables decreased by $4,000, merchandise inventory decreased by $6,000, trade payables increased by $2,000 and depreciation of $8,000 was recorded. Therefore, based only on this information, the net cash flow from operating activities for 20B was which of the following?
A) $30,000.
B) $18,000.
C) $19,000.
D) $10,000.

Question

Quizplus · Accepted Answer

Net income is $10,000 ($55,000 - $45,000). Add back the decrease in trade receivables ($4,000) and the decrease in merchandise inventory ($6,000), and subtract the increase in trade payables ($2,000) and the depreciation expense ($8,000). This results in net cash flow from operating activities of $18,000.

Matlock Company Reported Total Sales Revenue of $55,000 and Total