Tildon Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable increased by $3,000 and depreciation expense of $5,000 was recorded. Net cash provided by operating activities for the year is:
A) $50,000.
B) $34,000.
C) $36,000.
D) $35,000.

Question

Quizplus · Accepted Answer

To calculate net cash provided by operating activities, we need to start with net income of $35,000 and then make adjustments for changes in current assets and liabilities and non-cash expenses, like depreciation.

Starting with net income: 
Net income = $35,000

Adjustments: 
+ Depreciation expense = $5,000 
+ Increase in accounts receivable = $7,000 
- Increase in accounts payable = ($3,000)

Net cash provided by operating activities: 
$35,000 + $5,000 + $7,000 - $3,000 = $44,000

Therefore, the correct answer is C) $36,000.

Tildon Company Reported Net Income of $35,000 for the Year