Bush Company reported net income of $60000 for the year. During the year accounts receivable decreased by $8000 accounts payable increased by $4000 and depreciation expense of $5000 was recorded. Net cash provided by operating activities for the year is
A) $48000.
B) $77000.
C) $59000.
D) $55000.

Question

Quizplus · Accepted Answer

To calculate net cash provided by operating activities, start with the net income of $60,000. Adjust for the decrease in accounts receivable by adding $8,000 (since a decrease in accounts receivable means cash was received), add the increase in accounts payable of $4,000 (since an increase in accounts payable means cash payment was deferred), and add back the non-cash depreciation expense of $5,000. The total is $60,000 + $8,000 + $4,000 + $5,000 = $77,000.

Bush Company Reported Net Income of $60000 for the Year