Big Toy Corporation's records show net income of $20,000;depreciation expense of $10,000;and cash dividends declared and paid of $4,000.The amount of cash provided by operating activities using the indirect method is:
A)$40,000.
B)$30,000.
C)$20,000.
D)$10,000.

Question

Quizplus · Accepted Answer

The cash provided by operating activities using the indirect method starts with net income and adjusts for non-cash expenses and changes in working capital. Here, start with net income of $20,000, add back the non-cash depreciation expense of $10,000, resulting in $30,000. Dividends are not included in operating activities.

Big Toy Corporation's Records Show Net Income of $20,000;depreciation Expense