The accounting records of Miller Company provided the data below ($ in 000s). $\begin{array}{lrr}
\text { Net income } & \$ 17,500 \
\text { Depreciation expense } & 8,400 \
\text { Increase in accounts receivable } & 4,400 \
\text { Decrease in inventory } & 6,400 \
\text { Decrease in prepaid insurance } & 1,500 \
\text { Decrease in salaries payable } & 2,700 \
\text { Increase in interest payable } & 900
\end{array}$ What is the net cash provided (used) by operating activities?

Question

The accounting records of Miller Company provided the data below ($ in 000s). $\begin{array}{lrr}
\text { Net income } & \$  17,500 \
\text { Depreciation expense } & 8,400 \
\text { Increase in accounts receivable } & 4,400 \
\text { Decrease in inventory } & 6,400 \
\text { Decrease in prepaid insurance } & 1,500 \
\text { Decrease in salaries payable } & 2,700 \
\text { Increase in interest payable } & 900
\end{array}$ What is the net cash provided (used) by operating activities?

Quizplus · Accepted Answer

The net cash provided by operating activities is calculated by adjusting net income for non-cash expenses and changes in working capital. Start with net income ($17,500), add back depreciation ($8,400), subtract the increase in accounts receivable ($4,400), add the decrease in inventory ($6,400), add the decrease in prepaid insurance ($1,500), subtract the decrease in salaries payable ($2,700), and add the increase in interest payable ($900). The result is $27,600.

The Accounting Records of Miller Company Provided the Data Below