The activities for the year ended December 31,2015 included the following: • 2018's net income after taxes totaled $125,000.
• Accounts receivable Increased $32,000
• Recorded a $10,000 goodwill impairment loss during the year
• Inventory decreased $8,000
How much would be presented as cash flow from operations?

Question

Quizplus · Accepted Answer

To calculate cash flow from operations using the indirect method, we start with net income and adjust for changes in current assets and liabilities. 
Starting with net income: 
Net income = $125,000
Add back non-cash expenses:
Goodwill impairment loss = $10,000
Adjust for changes in current assets and liabilities: 
Accounts receivable increase = -$32,000
Inventory decrease = +$8,000
Cash flow from operations = $125,000 + $10,000 - $32,000 + $8,000 = $111,000
Therefore, the correct answer is B) $95,000

The Activities for the Year Ended December 31,2015 Included the Following