Question

The following information is available from the current period financial statements:

Net income $165,000
Depreciation expense 28,000
Increase in accounts receivable 16,000
Decrease in accounts payable 21,000 ​

The net cash flow from operating activities using the indirect method is _____.
(A) $156,000
(B) $188,000
(C) $198,000
(D) $230,000

Answer 1

The correct answer is option (a).

Step-by-step explanation:

According to the scenario, the computation for given data are as follows:

Net cash flow = Net income + Depreciation expense - Increase in accounts receivable - Decrease in accounts payable

Net cash flow = $165,000 + $28,000 - $16,000 - $21,000

= $193,000 - $37,000

= $156,000

Hence, the net cash flow from operating activities using the indirect method is $156,000.