Question

A company's income statement showed the following: net income, $149,000 and depreciation expense, $37,500. An examination of the company's current assets and current liabilities showed the following changes: accounts receivable decreased $11,900; merchandise inventory increased $23,000; and accounts payable increased $5,900. Calculate the net cash provided or used by operating activities.

Answer 1

$181,300

Step-by-step explanation:

Net cash flow provided or used by operating activities is the net income plus depreciation since depreciation is not cash expense,plus the decrease in accounts receivable minus the increase in merchandise inventory plus the increase in accounts payable.

cash from operating activities=$149,000+$37,500+$11,900-$23,000+$5,900=$181,300

The cash flow provided by operating activities is $181,300

The increase in accounts payable was added because it represented cash saved by not paying accounts payable