Compute the net increase or decrease in cash flows if Star Corporation had $250,000 in net income, $30,000 in depreciation expense, a decrease of $20,000 in A/R and an increase in bonds payable of $50,000.

Question

Quizplus · Accepted Answer

Net increase or decrease in cash flows can be calculated using the indirect method of cash flow statement. 
Net increase or decrease in cash flows = Net Income + Depreciation Expense - Increase in Current Assets + Increase in Current Liabilities. 
Substituting the given values, we get, 
Net increase or decrease in cash flows = $250,000 + $30,000 - (-$20,000) + $50,000 = $350,000. 
Therefore, the correct option is B.

Compute the Net Increase or Decrease in Cash Flows If