The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000, and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: $\begin{array}{lrr} & \text { End } & \text { Beginning } \
\text { Cash } & \$ 50,000 & \$ 60,000 \
\text { Accounts receivable } & 112,000 & 108,000 \
\text { Inventories } & 105,000 & 93,000 \
\text { Prepaid expenses } & 4,500 & 6,500 \
\text { Accounts payable (merchandise creditors) } & 75,000 & 89,000
\end{array}$
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $271,000
B) $279,000
C) $327,000
D) $256,000

Question

The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000, and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: $\begin{array}{lrr} & \text { End } & \text { Beginning } \
\text { Cash } & \$ 50,000 & \$ 60,000 \
\text { Accounts receivable } & 112,000 & 108,000 \
\text { Inventories } & 105,000 & 93,000 \
\text { Prepaid expenses } & 4,500 & 6,500 \
\text { Accounts payable (merchandise creditors) } & 75,000 & 89,000
\end{array}$ 
 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $271,000
B) $279,000
C) $327,000
D) $256,000

Quizplus · Accepted Answer

Net income + Depreciation + Amortization + Decrease in current assets - Increase in current liabilities = Cash flows from operating activities$250,000 + $40,000 + $9,000 + ($60,000 - $50,000) + ($108,000 - $112,000) + ($93,000 - $105,000) + ($89,000 - $75,000) = $271,000

The Net Income Reported on the Income Statement for the Current