Question

A company's income statement showed the following: net income, $132,000; depreciation expense, $39,000; and gain on sale of plant assets, $13,000. An examination of the company's current assets and current liabilities showed the following changes accounts receivable decreased $11,200; merchandise inventory increased $27,000; prepaid expenses increased $8000; accounts payable increased $5200. Calculate the net cash provided or used by operating activities.

Answer 1

Answer

--Requirement, with working

Net Income	$132,000
Adjustments:
Depreciation expense	$39,000
Gain on sale of plant assets	($13,000)
Decreased in accounts receivables	$11,200
Increase in inventory	($27,000)
Increase in prepaid expense	($8,000)
Increase in accounts payable	$5,200
Net Cash provided (used by) operating activities	$139,400	Answer

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No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income