Consider the following Net income 190000 Depreciation Expens

Consider the following: Net income, $190,000 Depreciation Expense $22.000 Increase in accounts receivable, $8,000 Decrease in merchandise inventory, $40,000 .Decrease in accounts payable, $16,000 Increase in income taxes payable, $6,000 Using the Indirect Method, the Net Cash provided by Operating Activities was: Select one: O A. $212,000 O B. $234,000 O C. $202,000 D. $180,000

Solution

A decrease in current liability(such as accounts payable) is an outflow of cash while a decrease in current asset(such as accounts receivable) is an inflow of money and vice-versa.

Net income	$190000
Add:Depreciation Expense	$22000
Less:increase in Accounts Receivable	(8000)
Add:decrease in merchandise inventory	40000
Less:Decrease in Accounts Payable	(16000)
Add:increase in income taxes payable	$6000
Net Cash flow from Operating activities	$234000.