Howard Limited had profit of $33,000 during the financial year. Included in profit was a depreciation expense of $14,000. Across the year accounts receivable increased by $11,000 and accounts payable increased by $5,000. The amount of cash flow from operating activities is:

Question

Quizplus · Accepted Answer

The cash flow from operating activities can be calculated by starting with the net profit, then adjusting for non-cash expenses and changes in working capital. Here, start with the net profit of $33,000, add back the non-cash depreciation expense of $14,000, then adjust for the increase in accounts receivable (a use of cash) by subtracting $11,000, and finally adjust for the increase in accounts payable (a source of cash) by adding $5,000. The calculation is $33,000 + $14,000 - $11,000 + $5,000 = $41,000. However, since there's no option matching $41,000 exactly and assuming a possible typo or calculation error in the question or choices, the closest correct option based on the provided calculation method is C) $42,000.

Howard Limited Had Profit of $33,000 During the Financial Year