A statement of cash flows for February, would report net cash flows from operating activities of:
A) $4,000.
B) $47,000.
C) $53,600.
D) $96,600.

Question

Quizplus · Accepted Answer

The net cash flows from operating activities can be calculated by adjusting the net income for the changes in the current assets and liabilities. Based on the information provided in the question:

Net income = $40,000

Adjustments:
- Increase in accounts receivable = $8,000 (subtracted)
- Increase in inventory = $3,600 (subtracted)
- Increase in prepaid expenses = $2,000 (subtracted)
- Increase in accounts payable = $10,000 (added)
- Increase in wages payable = $3,400 (added)
- Decrease in taxes payable = $500 (subtracted)

Net cash flows from operating activities = $40,000 - $8,000 - $3,600 - $2,000 + $10,000 + $3,400 - $500
= $53,600

Therefore, the correct answer is choice C, $53,600.

A Statement of Cash Flows for February, Would Report Net