The net income reported on the income statement for the current year was $307,44

Question

The net income reported on the income statement for the current year was $307,440. Depreciation recorded on fixed assets and amortization of patents for the year were $42,422 and $10,477, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? Select the correct answer. $300,902 $292,665 $402,464 $326,542

Explanation / Answer

Cash flow from operating activities Indirect Method Details Amt $ Net Income                 307,440 Adjustment of net profit to derive cash flow from opearting activities: Add : Depreciation                  42,422 Add: Amortization                  10,477 Less: Increase in Accounts Receivable               (22,331) Less: Increase in Inventory               (11,466) Add: Decrease in Prepaid expense                    2,810 Less: Decrease in Accounts Payable               (28,450) Total Cash flow from operating activities               300,902 So Correct answer is $300,902

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