The net income reported on the income statement for the current year was $70,000. Depreciation Expense recorded on fixed assets was $18,000. What is the net cash flow from operations that would appear on a cash flow statement using the indirect method?
A) $70,000
B) $88,000
C) $18,000
D) $52,000

Question

Quizplus · Accepted Answer

The net cash flow from operations, using the indirect method, starts with the net income and then adjustments are made for non-cash expenses and changes in working capital. Since depreciation expense is a non-cash expense, it is added back to the net income. Therefore, $70,000 (net income) + $18,000 (depreciation expense) = $88,000.

The Net Income Reported on the Income Statement for the Current