Question

Net income $100,000; Depreciation expense $10,000; Net increase in accounts: receivable $5,000; Net increase in accounts: payable $3,000; On the basis of the information provided in the table above for a corporation, the corporation’s net cash flow from operating activities for the current year is what?

a) $98,000
b) $102,000
c) $108,000
d) $118,000

Answer 1

The corporation's net cash flow from operating activities for the current year is $108,000.

Step-by-step explanation:

The net cash flow from operating activities can be calculated using the indirect method, which starts with the net income and adjusts for non-cash expenses and changes in working capital. In this case, the net cash flow from operating activities can be calculated as follows:

Net income ($100,000) + Depreciation expense ($10,000) - Net increase in accounts receivable ($5,000) + Net increase in accounts payable ($3,000) = $108,000.

Therefore, the corporation's net cash flow from operating activities for the current year is $108,000.