At the end of the first year of operations, Meacham's balance sheet showed the following: Accounts Receivable, $13,400; Inventory, $9,400; and Accounts Payable, $14,650. The company's income statement reports net income of $37,400, including depreciation expense of $10,400. Using only the given information, compute Meacham's net cash flow from operating activities using the indirect method.
A) $65,250.
B) $39,650.
C) $24,350.
D) $26,650.

Question

Quizplus · Accepted Answer

To calculate net cash flow from operating activities using the indirect method, start with net income ($37,400), add back depreciation ($10,400), and adjust for changes in working capital. Accounts Receivable increased by $13,400, Inventory increased by $9,400, and Accounts Payable increased by $14,650. The calculation is: $37,400 + $10,400 - $13,400 - $9,400 + $14,650 = $39,650.

At the End of the First Year of Operations, Meacham's