A company reported the following information: $\begin{array}{lll}
&\underline{ 2014 }&\underline{ 2013 }\
\text { Accountsreceivable } &\$ 50,000 & \$ 65,000 \
\text { Inventories } &43,000 & 40,000 \
\text { Accounts payable } &29,000 & 39,000 \
\text {Net income } &100,000 & \
\text { Depreciation expense } &11,000 &
\end{array}$
If the indirect method is used to prepare the operating activities section of the statement of cash flows,what amount will be reported as net cash inflow from operating activities for 2014?
A)$92,000
B)$109,000
C)$111,000
D)$113,000

Question

A company reported the following information: $\begin{array}{lll}
&\underline{ 2014 }&\underline{ 2013 }\
 \text { Accountsreceivable } &\$ 50,000 & \$ 65,000 \
 \text { Inventories } &43,000 & 40,000 \
 \text { Accounts payable } &29,000 & 39,000 \
 \text {Net income  } &100,000 & \
 \text { Depreciation expense } &11,000 &
\end{array}$ 
If the indirect method is used to prepare the operating activities section of the statement of cash flows,what amount will be reported as net cash inflow from operating activities for 2014?
A)$92,000
B)$109,000
C)$111,000
D)$113,000

Quizplus · Accepted Answer

The net cash inflow from operating activities for 2014 can be calculated as:

Net Income + Depreciation Expense - Increase in Accounts Receivable + Increase in Inventories - Decrease in Accounts Payable 
= 100,000 + 11,000 - (50,000 - 65,000) + (43,000 - 40,000) - (39,000 - 29,000) 
= $113,000

Therefore, the correct answer is (D) $113,000.

A Company Reported the Following Information If the Indirect Method Is Used to Prepare the Operating