The data given below are from the accounting records of the Kuhn Corporation: Based on this information, the net cash provided by (used in)operating activities using the indirect method would be:
A)$55,000
B)$58,000
C)$50,000
D)$60,000

Question

The data given below are from the accounting records of the Kuhn Corporation:   Based on this information, the net cash provided by (used in)operating activities using the indirect method would be:
A)$55,000 
B)$58,000 
C)$50,000 
D)$60,000

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities using the indirect method, we need to start with net income and then make adjustments for non-cash items and changes in working capital accounts.

Starting with net income of $80,000, we need to add back depreciation expense of $20,000 (a non-cash expense) and subtract the increase in accounts receivable of $5,000 and the increase in accounts payable of $45,000 (changes in working capital accounts).

Net cash provided by operating activities = Net income + Depreciation expense - Increase in accounts receivable - Increase in accounts payable

= $80,000 + $20,000 - $5,000 - $45,000
= $50,000

Therefore, the correct answer is C) $50,000. 11ea7998_5c17_6bf0_911b_65a3841efd22_TB2627_00_TB2627_00

The Data Given Below Are from the Accounting Records of the Kuhn