Question

Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct. Cash from operating activities Net income $60,000 Depreciation (4,000) Increase in accounts receivable (2,000) Increase in deferred tax liability (1,000) $53,000 Cash from investing activities Purchase of marketable securities (48,000) Dividends paid 1,500 (46,500) Cash from financing activities Increase in short-term debt $ (500) Increase in long-term debt (2,500)($3,000) Increase in cash $3,500 The correct cash flows from operating activities is: (Points : 2) $65,500 $63,500 $53,500 None of the above

Answer 1

Answer:

None of the above.

Explanation:

Given that,

Net Income = $60,000

Depreciation = $4,000

Increase in Accounts Receivable = $2,000

Increase in Deferred Tax Liability = $1,000

Net Cash Flows from Operating Activities:

= Net Income + Depreciation - Increase in Accounts Receivable + Increase in Deferred Tax Liability

= $60,000 + $4,000 - $2,000 + $1,000

= $63,000