Hansen Corporation reported net income of $328,000 for the current year. In addition, Accounts Payable increased $24,000 during the year, inventory increased by $15,000, and Accounts Receivable decreased by $20,000. Using the indirect method, what is the net cash flow from operating activities?
A)$387,000
B)$357,000
C)$328,000
D)$317,000

Question

Quizplus · Accepted Answer

To calculate net cash flow from operating activities using the indirect method, adjustments are made to net income for any changes in current assets and liabilities.

Starting with net income: $328,000 
Add back depreciation (if provided in the problem) or subtract any gains on the sale of assets and add any losses on the sale of assets (if provided in the problem).

No such adjustments have been mentioned, so we can skip this part.

Adjustments for changes in current assets and liabilities:

Accounts Payable increased $24,000: Add $24,000 
Inventory increased by $15,000: Subtract $15,000 
Accounts Receivable decreased by $20,000: Add $20,000

Net cash flow from operating activities = $328,000 + $24,000 - $15,000 + $20,000 = $357,000

Therefore, the best choice is B, which is $357,000.

Hansen Corporation Reported Net Income of $328,000 for the Current