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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
Option b is the right answer.
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.
net income100000
dep +10000
A/R -30000
A/P -15000
answer =65000 B
Cash65000=======================================
Operating Activities Cash Flow B: $65000
Option b) $65000 is the correct answer
Correct answer is b) $ 65,000
