Mavis Company's statement of cash flows showed net cash provided by operating activities of $47,000 in 2014. Mavis reported an increase in accounts payable of $6,000, an increase in inventory of $2,000, depreciation expense of $3,000, and dividends paid of $8,000. Mavis's net income for 2014 was

Question

Quizplus · Accepted Answer

The net cash provided by operating activities is calculated by adjusting net income for non-cash expenses and changes in current assets and liabilities.

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

Substituting the given values:

Net income + $3,000 - $6,000 - $2,000 - $8,000 = $47,000

Solving for net income:

Net income = $40,000

Mavis Company's Statement of Cash Flows Showed Net Cash Provided