Clark Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2015. The beginning balance in the Cash account was $2,500
Net cash provided by operating activities: $39,000
Net cash used for investing activities: $(25,000)
Net cash provided by financing activities: $1,200
Which of the following statements is true?
A)The statement of cash flows will show ending cash balance of $15,200.
B)The statement of cash flows will show total net cash flows of $64,000 positive.
C)The statement of cash flows will show total net cash flows of $15,200 negative.
D)The statement of cash flows will show ending cash balance of $17,700.

Question

Quizplus · Accepted Answer

To calculate the ending balance in the Cash account, we need to add the net cash provided by operating activities ($39,000) to the beginning balance in the Cash account ($2,500), and then subtract the net cash used for investing activities ($25,000) and add the net cash provided by financing activities ($1,200). 
Therefore, ending cash balance = beginning balance + net cash provided by operating activities - net cash used for investing activities + net cash provided by financing activities
= $2,500 + $39,000 - $25,000 + $1,200
= $17,700 
Therefore, the statement of cash flows will show ending cash balance of $17,700.

Clark Company Uses the Indirect Method to Prepare Its Statement