Meyer Company reported net income of €85,000 for the year. During the year, accounts receivable increased by €7,000, accounts payable decreased by €3,000 and depreciation expense of €5,000 was recorded. Net cash provided by operating activities for the year is
A) €80,000.
B) €100,000.
C) €84,000.
D) €85,000.

Question

Quizplus · Accepted Answer

Net cash provided by operating activities is calculated by adjusting net income for changes in working capital and non-cash expenses. Starting with net income of €85,000, subtract the increase in accounts receivable (€7,000) and the decrease in accounts payable (€3,000), then add back the non-cash depreciation expense (€5,000). This results in €80,000 (€85,000 - €7,000 - €3,000 + €5,000).

Meyer Company Reported Net Income of €85,000 for the Year