Question

A company's income statement showed the following: net income, $148,000 and depreciation expense, $37,200. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,800; merchandise inventory increased $22,800; and accounts payable increased $5,800. Calculate the net cash provided or used by operating activities.Multiple Choicea. $144,800.b. $180,000.c. $142,000.d. $214,000.e. $190,400.

Answer 1

b. $180,000

Step-by-step explanation:

Given;

net income = $148,000

depreciation expense = $37,200

decrease in accounts receivable = $11,800

increase in merchandise inventory = $22,800

increase in accounts payable = $5,800

Net cash provided or used by operating activities

= $148,000 + $37,200 + $11,800 - $22,800 + $5,800

= $180,000

An increase in a current asset represents an outflow of cash while a decrease represents an inflow of cash. An increase in current liability represents an inflow of cash while a decrease represents an outflow of cash.

The right option is b.