Question

Gleason Company reported net income of $242,000 for the year. During the year, accounts receivable increased by $32,000, accounts payable decreased by $10,000 and depreciation expense of $65,000 was recorded.

Net cash provided by operating activities for the year is ______.

Answer 1

$265,000

Step-by-step explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.

Net cash provided by operating activities for the year

= $242,000 - $32,000 - $10,000 + $65,000

= $265,000