The following information is available from the current period financial statements: $$\begin{array} { l r }
\text { Net income } & \$ 175,000 \
\text { Depreciation expense } & 28,000 \
\text { Increase in accounts receivable } & 16,000 \
\text { Decrease in accounts payable } & 21,000
\end{array}$$
The net cash flow from operating activities using the indirect method is
A) $166,000
B) $184,000
C) $110,000
D) $240,000

Question

The following information is available from the current period financial statements: $$\begin{array} { l r } 
\text { Net income } & \$ 175,000 \
\text { Depreciation expense } & 28,000 \
\text { Increase in accounts receivable } & 16,000 \
\text { Decrease in accounts payable } & 21,000
\end{array}$$ 
 The net cash flow from operating activities using the indirect method is
A) $166,000
B) $184,000
C) $110,000
D) $240,000

Quizplus · Accepted Answer

To calculate the net cash flow from operating activities using the indirect method, start with the net income and adjust for non-cash expenses and changes in working capital. Here, add back the depreciation expense ($28,000), subtract the increase in accounts receivable ($16,000), and subtract the decrease in accounts payable ($21,000) from the net income ($175,000). The calculation is $175,000 + $28,000 - $16,000 - $21,000 = $166,000.

The Following Information Is Available from the Current Period Financial