The net income reported on the income statement for the current year was $480,000. Depreciation was $62,000. Accounts receivable and inventories decreased by $20,000 and $32,000, respectively. Prepaid expenses and accounts payable increased, respectively, by $2,000 and $16,000. How much cash was provided by operating activities?
A)$536,000.
B)$608,000.
C)$576,000.
D)$476,000.

Question

Quizplus · Accepted Answer

To calculate cash provided by operating activities, adjust net income for non-cash expenses and changes in working capital. Start with net income of $480,000, add back depreciation of $62,000, add decreases in accounts receivable ($20,000) and inventories ($32,000), and add increases in accounts payable ($16,000). Subtract the increase in prepaid expenses ($2,000). Total cash provided is $480,000 + $62,000 + $20,000 + $32,000 + $16,000 - $2,000 = $608,000.

The Net Income Reported on the Income Statement for the Current