Wilton Company reported net income of $50,000 for the year. During the year, accounts receivable decreased 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) $40,000.
B) $65,000.
C) $49,000.
D) $45,000.

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. Start with net income of $50,000, add the decrease in accounts receivable ($7,000), add the increase in accounts payable ($3,000), and add the depreciation expense ($5,000). This results in $50,000 + $7,000 + $3,000 + $5,000 = $65,000.

Wilton Company Reported Net Income of $50,000 for the Year