Long Company's net income last year was $43,000 and cash dividends declared and paid to the company stockholders was $28,000. Changes in selected balance sheet accounts for the year appear below: Based solely on this information, the net cash flows from operating activities under the indirect method on the statement of cash flows would be

Question

Long Company's net income last year was $43,000 and cash dividends declared and paid to the company stockholders was $28,000. Changes in selected balance sheet accounts for the year appear below:  Based solely on this information, the net cash flows from operating activities under the indirect method on the statement of cash flows would be

Quizplus · Accepted Answer

We can use the indirect method to calculate the net cash flows from operating activities by starting with net income and adjusting for changes in non-cash balance sheet accounts.

Starting with net income: $43,000

Add back non-cash expenses:
- Depreciation: $16,000

Adjust for changes in non-cash current assets:
- Decrease in accounts receivable: $5,000
- Increase in prepaid expenses: $1,000

Adjust for changes in non-cash current liabilities:
- Increase in accounts payable: $6,000
- Increase in accrued expenses: $5,000

Net cash flows from operating activities: $43,000 + $16,000 - $5,000 - $1,000 + $6,000 + $5,000 = $83,000

Therefore, the best choice is C, $83,000.

Long Company's Net Income Last Year Was $43,000 and Cash