The net income for a corporation for the current accounting period was $275,000.Changes in various accounts during the period follow: $\begin{array}{|l|l|}
\hline\text { Cash } & \$ 12,500 \text { increase } \
\hline\text { Investments in securities available for sale } & 40,000 \text { decrease } \
\hline \text { Accounts receivable } & 19,000 \text { increase } \
\hline \text { Inventories } & 8,000 \text { increase } \
\hline \text { Short-term prepayments } & 3,000 \text { decrease } \
\hline \text { Accounts payable } & 11,500 \text { increase } \
\hline \text { Accrued liabilities } & 2,200 \text { decrease } \
\hline \text { Notes payable to banks (due in nine months) } & 50,000 \text { increase }\\hline
\end{array}$ The cash provided by operations for the current period is:
A)$275,000
B)$260,300
C)$350,300
D)$309,550
E)$278,340

Question

Quizplus · Accepted Answer

The cash provided by operations is calculated by adding the net income to the decrease in current assets and subtracting the increase in current liabilities. In this case, the decrease in current assets is $40,000 + $3,000 = $43,000, and the increase in current liabilities is $11,500 + $50,000 = $61,500. Therefore, the cash provided by operations is $275,000 + $43,000 - $61,500 = $260,300.

The Net Income for a Corporation for the Current Accounting