The following information is available from the financial statements of Barrington Corporation for the year ended December 31,2014: What is Barrington Corporation's net cash flow from operating activities?
A) $440,000
B) $466,000
C) $520,000
D) $542,000

Question

The following information is available from the financial statements of Barrington Corporation for the year ended December 31,2014:  What is Barrington Corporation's net cash flow from operating activities?
A) $440,000 
B) $466,000 
C) $520,000 
D) $542,000

Quizplus · Accepted Answer

Barrington Corporation's net cash flow from operating activities can be calculated using the indirect method. We start with net income and adjust for non-cash items and changes in working capital.

Net Income: $520,000 
Add: Depreciation Expense: $90,000 
Add: Decrease in Accounts Receivable: $20,000 
Add: Increase in Prepaid Expenses: $12,000 
Less: Increase in Accounts Payable: ($10,000) 
Less: Increase in Accrued Liabilities: ($70,000) 
Less: Increase in Income Taxes Payable: ($40,000)

Net Cash Flow from Operating Activities: $542,000

Therefore, the correct answer is D, $542,000.

The Following Information Is Available from the Financial Statements of Barrington