During the year, Smith Company reported net income of $300,000, including amortization of intangible assets of $66,000, depreciation of plant assets of $132,000, and amortization of premium on investment in bonds of $20,000. Applying the indirect method, cash provided by operating activities is what amount?
A) $300,000
B) $518,000
C) $478,000
D) $498,000

Question

Quizplus · Accepted Answer

Cash provided by operating activities is calculated by adding back non-cash expenses to net income. In this case, the non-cash expenses are amortization of intangible assets, depreciation of plant assets, and amortization of premium on investment in bonds. Therefore, cash provided by operating activities is $300,000 + $66,000 + $132,000 + $20,000 = $518,000.

During the Year, Smith Company Reported Net Income of $300,000