Which of the following would NOT be used in determining the increase or decrease

Question

Which of the following would NOT be used in determining the increase or decrease in cash from operating activities under the indirect method?

depreciation expense

change in accounts receivable

change in prepaid expenses

payment of cash dividends

none of the above

A company has net income of $235,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased $2,000 and $4,000, respectively. The income statement also reported a loss on the sale of equipment of $3,000. How much did cash increase from operating activities?

$201,000

$207,000

$281,000

$293,000

none of the above

a.

depreciation expense

b.

change in accounts receivable

c.

change in prepaid expenses

d.

payment of cash dividends

e.

none of the above

Explanation / Answer

1. D.payment of cash dividends

2.

Net Income 2,35,000 Add: Depreciation Expenses      26,000 Less: Increase in Accounts Receivble    -15,000 Less: Increase in Inventory    -40,000 Add: Decrease in prepaid expenses        2,000 Less: Decrease in Accounts Payable       -4,000 Add: Loss on sale of equipment        3,000 Cash flow from Operating Activities 2,07,000

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