Records for Serenity Sounds show net income of $35,000; depreciation expense of $11,000; and cash dividends paid of $4,000. The cash flow from operating activities on the cash flow statement using the indirect method is:

Question

Quizplus · Accepted Answer

To calculate the cash flow from operating activities using the indirect method, we start with net income and make adjustments for non-cash expenses and changes in working capital accounts. Thus, the calculation is as follows:
Net income = $35,000
Add back depreciation expense = $11,000
Operating cash flow before changes in working capital = $46,000
Subtract cash dividends paid = $4,000
Cash flow from operating activities = $46,000 - $4,000 = $42,000

Records for Serenity Sounds Show Net Income of $35,000; Depreciation