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For a recent year a corporation's financial statements reported the following:?

Net Income $100,000

Depreciation  $10,000

Increase in AR  $30,000

Decrease in AP $15,000

 

Based on the above information, what amount will the corporation report as Cash Provided by Operating Activities on the cash flow statement?

 

a)  $165,000

b)  $  65,000

c)  $125,000

d) None of the above

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Question added by Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants
Date Posted: 2015/08/03
Maria Theresa Gumangan
by Maria Theresa Gumangan , Accounts And Admin Officer , Tecumex Middle East FZCO

Net Income                    - $100,000

Depreciation                 -    10,000

Increase in AR              -   (30,000)  

Decrease in AP            -   (15,000)

                                          -------------

Cash Provided                  $65,000     === B

by Operating Activities

Shahbaz Hayder
by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Option b is the right answer.

Sadiq ul Islam
by Sadiq ul Islam , Finance Manager , Bindawood Group of Companies

b)65000 is the right answer

Wasim khan wazir
by Wasim khan wazir , Finance Specialist , Mott Macdonald

B*********************...............

b) $65,000

 

Depreciation is an estimated amount and not real cash spent so we added it back.

Increase in Account Receivables (AR) illustrate that we have made more credit sales hence lock up of capital therefore we less it.

Decrease in Account Payables (AP) shows that we have paid cash hence reduction in our cash availabe which implies deduction.

 

Zaid Maimoun
by Zaid Maimoun , Accountant , AD tarawneh and partners

net income100000

dep               +10000

A/R                -30000

A/P                 -15000

answer =65000 B

Shazia Anees
by Shazia Anees , Assistant Manager Finance , Arham Trading Company

Cash65000=======================================

Cash generated from operations : $65,000

Operating Activities Cash Flow B: $65000

Ahmer Zamir
by Ahmer Zamir , Consultant , Saleem Associates & Co

Option b)  $65000 is the correct answer 

Mohammed Asim Nehal
by Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants

Correct answer is   b)  $  65,000

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