The information below was obtained from the financial statements of Faraday Corp.Based on this information,what was the amount of the net cash provided by operating activities during the current year?

A) $713,000
B) $721,000
C) $661,000
D) $637,000

Question

The information below was obtained from the financial statements of Faraday Corp.Based on this information,what was the amount of the net cash provided by operating activities during the current year?

A) $713,000 
B) $721,000 
C) $661,000 
D) $637,000

Quizplus · Accepted Answer

The net cash provided by operating activities is calculated using the indirect method, where non-cash expenses and gains/losses are added/deducted to net income and changes in current assets and liabilities are adjusted. In this case, adding back depreciation and amortization ($141,000) and deducting the increase in accounts receivable ($34,000) and increase in inventory ($8,000) gives a net cash provided by operating activities of $721,000.

The Information Below Was Obtained from the Financial Statements of Faraday