Carmen's Candies' Net Income was $40,000.Other accounts that changed included: Accounts Receivable decreased by $30,000;Merchandise Inventory increased by $20,000;Accounts Payable increased by $4,000;and Salaries Payable increased by $1,000.The amount of Net Cash Flow from Operating Activities using the indirect method is:
A)$33,000.
B)$47,000.
C)$55,000.
D)$61,000.

Question

Quizplus · Accepted Answer

The net cash flow from operating activities is calculated by adjusting the net income for changes in working capital accounts. Starting with the net income of $40,000, add the decrease in accounts receivable ($30,000), subtract the increase in inventory ($20,000), add the increase in accounts payable ($4,000), and add the increase in salaries payable ($1,000). This results in a net cash flow of $55,000.

Carmen's Candies' Net Income Was $40,000