The net income reported on the income statement for the current year was $200,000. Depreciation recorded on plant assets was $38,000. Accounts receivable and inventories increased by $2,000 and $8,000, respectively. Prepaid expenses and accounts payable decreased by $1,000 and $11,000, respectively. Using the indirect method, how much would be reported for net cash flows from operating activities in the statement of cash flows?
A) $180,000
B) $200,000
C) $218,000
D) $238,000

Question

Quizplus · Accepted Answer

Net cash flows from operating activities can be calculated as follows:
Net Income + Depreciation - Increase in Accounts Receivable - Increase in Inventories + Decrease in Prepaid Expenses - Decrease in Accounts Payable
$200,000 + $38,000 - $2,000 - $8,000 - (-$1,000) - (-$11,000) = $218,000

The Net Income Reported on the Income Statement for the Current