The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $198,000
B) $324,000
C) $352,000
D) $296,000

Question

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:  What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
A) $198,000 
B) $324,000 
C) $352,000 
D) $296,000

Quizplus · Accepted Answer

Net cash flows from operating activities = Net Income + Depreciation + Amortization - Increase in Current Assets + Increase in Current Liabilities
= $275,000 + $40,000 + $9,000 - ($34,000 - $25,000) + ($48,000 - $20,000)
= $296,000

The Net Income Reported on the Income Statement for the Current