A company reported net income of $200,000 during 2016. The company reported depreciation expense of $35,000, patent amortization of $10,000 and a $5,000 loss on the sale of equipment. Using the indirect method, how much is the company's net cash flow from operating activities?
A)$245,000.
B)$250,000.
C)$240,000.
D)$235,000.

Question

Quizplus · Accepted Answer

The net cash flow from operating activities is calculated by adjusting the net income for non-cash expenses and losses. Starting with the net income of $200,000, add back the depreciation expense of $35,000, patent amortization of $10,000, and the loss on sale of equipment of $5,000. This results in a total of $250,000.

A Company Reported Net Income of $200,000 During 2016