A company had net income of $¥ 2,100,000$. Depreciation expense is $¥ 260,000$. During the year, Accounts Receivable and Inventory increased $¥ 150,000$ and $¥ 400,000$, respectively. Prepaid Expenses and Accounts Payable decreased $¥ 20,000$ and $¥ 40,000$, respectively. There was also a loss on the sale of equipment of $¥ 30,000$. How much cash was provided by operating activities?

Question

Quizplus · Accepted Answer

To calculate cash provided by operating activities, start with net income and adjust for non-cash expenses and changes in working capital. Start with net income $¥ 2,100,000$, add back depreciation $¥ 260,000$, and the loss on sale of equipment $¥ 30,000$. Subtract increases in Accounts Receivable $¥ 150,000$ and Inventory $¥ 400,000$. Add back the decrease in Prepaid Expenses $¥ 20,000$ and subtract the decrease in Accounts Payable $¥ 40,000$. The calculation is: $¥ 2,100,000 + ¥ 260,000 + ¥ 30,000 - ¥ 150,000 - ¥ 400,000 + ¥ 20,000 - ¥ 40,000 = ¥ 1,820,000$.

A Company Had Net Income Of ¥2,100,000¥ 2,100,000¥2,100,000 Depreciation Expense Is

A Company Had Net Income Of $¥ 2,100,000$ Depreciation Expense Is