Mavis Company's statement of cash flows showed net cash provided by operating activities of $47,000 in 2016. Mavis reported an increase in accounts payable of $6,000, an increase in inventory of $2,000, depreciation expense of $3,000, and dividends paid of $8,000. Mavis's net income for 2016 was

Question

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To find net income, adjust the net cash provided by operating activities for changes in working capital and non-cash expenses: $47,000 (net cash) - $6,000 (increase in accounts payable) + $2,000 (increase in inventory) - $3,000 (depreciation) = $40,000. Dividends do not affect net income.

Mavis Company's Statement of Cash Flows Showed Net Cash Provided