Copyright

Marjorie is preparing the Statement of Cash Flows for her company. Based on the following...

Question:

Marjorie is preparing the Statement of Cash Flows for her company. Based on the following information, what would be the Cash Provided by Operating Activities using the Indirect Method?

Net Income $10,000
Decrease in Accounts Receivable $2,000
Increase in Wages Payable $1,000
Increase in Equipment $6,000
Decrease in Bonds Payable $15,000

A. $1,000

B. $13,000

C. $11,000

D. $5,000

Operating cash flow:

Operating cash flow refers to the cash flow provided by the operations of the company. It is calculated to analyze whether the company is generating enough cash flows to work in future or the operations need to be revived.

Answer and Explanation:

Option (B) $13,000 is correct.

Computation of cash provided by operating activity

Particular Amount
Net income $10,000
Add: Decrease in account receivable $2,000
Add: Increase in wages payable $1,000
Cash flow from operating activity $13,000

Learn more about this topic:

Loading...
Operating Cash Flow: Definition & Examples

from Finance 101: Principles of Finance

Chapter 10 / Lesson 4
10K

Related to this Question

Explore our homework questions and answers library