The net income reported on the income statement for the current year was $1,260,000. Depreciation recorded on plant assets was $257,000. Accounts receivable and inventories increased by $72,000 and $48,000, respectively. Prepaid expenses and accounts payable decreased by $6,000 and $66,000, respectively. How much cash was provided by operating activities?
A) $1,280,000.
B) $1,400,000.
C) $1,337,000.
D) $1,697,000.

Question

Quizplus · Accepted Answer

To calculate cash provided by operating activities, adjust net income for non-cash expenses and changes in working capital: $1,260,000 + $257,000 (depreciation) - $72,000 (increase in accounts receivable) - $48,000 (increase in inventories) + $6,000 (decrease in prepaid expenses) + $66,000 (decrease in accounts payable) = $1,337,000.

The Net Income Reported on the Income Statement for the Current