In 2014, Usher Sports Shop had cash flows from investing activities of ($2,150,000) and cash flows from financing activities of ($3,219,000). The balance in the firm's cash account was $980,000 at the beginning of 2014 and $1,025,000 at the end of the year. Calculate Usher Sports Shop's cash flow from operations for 2014.

Question

Quizplus · Accepted Answer

Using the indirect method, we can calculate cash flow from operations as:

Cash flow from operations = Net income + Depreciation and amortization - Increase in current assets + Increase in current liabilities

We do not have enough information to calculate net income or depreciation and amortization. However, we can use the information given in the problem to calculate the changes in current assets and liabilities:

Change in current assets = Ending balance - Beginning balance = $1,025,000 - $980,000 = $45,000 (increase)

Change in current liabilities = 0 (not given)

Therefore, cash flow from operations = Net income + Depreciation and amortization - $45,000.

We do not have enough information to calculate net income or depreciation and amortization, so the answer cannot be determined exactly. However, we can eliminate answer choices A, C, and D because they are too high given the negative cash flows from investing and financing activities.

Answer choice B is the best option because it is the closest to the actual answer, even though we cannot determine the exact cash flow from operations.

In 2014, Usher Sports Shop Had Cash Flows from Investing