The net income reported on the income statement for the current year was ¥2,750,000. Depreciation recorded on plant assets was ¥380,000. Accounts receivable and inventories increased by ¥20,000 and ¥80,000, respectively. Prepaid expenses and accounts payable decreased by ¥10,000 and ¥110,000 respectively. How much cash was provided by operating activities?
A) ¥2,550,000
B) ¥2,930,000
C) ¥2,750,000
D) ¥3,090,000

Question

Quizplus · Accepted Answer

To calculate the cash provided by operating activities using the indirect method, we need to start with the net income and make adjustments for non-cash expenses and changes in current assets and liabilities.

Net Income: ¥2,750,000
Add Depreciation: +¥380,000
Increase in Accounts Receivable: -¥20,000
Increase in Inventories: -¥80,000
Decrease in Prepaid Expenses: +¥10,000
Decrease in Accounts Payable: -¥110,000

Cash Provided by Operating Activities: ¥2,930,000

The Net Income Reported on the Income Statement for the Current