Avatar Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2015: Net cash provided by operating activities: $102,000
Net cash used in investing activities: $(113,500)
Net cash provided by financing activities: $15,000
If the cash balance at the beginning of the year was $13,000, what would be the ending cash balance?
A)$16,500
B)$3,500
C)$13,000
D)$10,500

Question

Quizplus · Accepted Answer

Using the indirect method, the net increase in cash for the year can be calculated as:

Net increase in cash = Cash from operating activities + Cash from investing activities + Cash from financing activities
Net increase in cash = $102,000 - $113,500 + $15,000
Net increase in cash = $3,500

Therefore, the ending cash balance would be:

Ending cash balance = Beginning cash balance + Net increase in cash
Ending cash balance = $13,000 + $3,500
Ending cash balance = $16,500

Therefore, the best choice is A) $16,500.

Avatar Company Uses the Indirect Method to Prepare Its Statement