Freeman Company's accounting records include the following information: What is the amount of net cash provided by operating activities indicated by these transactions?
A)$40,000.
B)$45,000.
C)$55,000.
D)$60,000.

Question

Quizplus · Accepted Answer

Net cash provided by operating activities can be calculated using the indirect method of cash flow statement. Based on the information given, the net increase in accounts payable is $5,000, net decrease in accounts receivable is $10,000, and depreciation expense is $20,000. These items are added back to net income of $50,000 to calculate net cash provided by operating activities as follows:
Net income + Depreciation expense + Decrease in accounts receivable - Increase in accounts payable
= $50,000 + $20,000 - $10,000 - $5,000
= $55,000

Freeman Company's Accounting Records Include the Following Information: What Is