The Hambone Soup Store reported the following information for its most recent fiscal year: Accounts payable increased by $39 000; inventory decreased by $27 000; net profit was $66 000; and depreciation expense was $15 000.
On the cash flow statement, net cash flow from operating activities should be reported at:
A) $15 000.
B) $69 000.
C) $117 000.
D) $147 000.

Question

Quizplus · Accepted Answer

Net cash flow from operating activities is calculated by adjusting net profit for changes in working capital and non-cash expenses. Start with net profit of $66,000, add back depreciation of $15,000 (a non-cash expense), add the decrease in inventory of $27,000 (a source of cash), and add the increase in accounts payable of $39,000 (a source of cash). This results in $66,000 + $15,000 + $27,000 + $39,000 = $147,000.

The Hambone Soup Store Reported the Following Information for Its