Collins Corporation reported net income of $35,000;depreciation expenses of $20,000;a decrease in Accounts Payable of $2,000;and an increase in Accounts Receivable of $3,000.Net cash flow from operating activities using the indirect method is:
A)$55,000.
B)$54,000.
C)$50,000.
D)$56,000.

Question

Quizplus · Accepted Answer

Net cash flow from operating activities is calculated by adjusting net income for non-cash expenses and changes in working capital. Starting with net income of $35,000, add back depreciation of $20,000 (a non-cash expense), subtract the increase in Accounts Receivable of $3,000, and subtract the decrease in Accounts Payable of $2,000. This results in $35,000 + $20,000 - $3,000 - $2,000 = $50,000.

Collins Corporation Reported Net Income of $35,000;depreciation Expenses of $20,000;a