Question

Majorn Auto Parts Store had net income of $90,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year:
Increase in accounts receivable $120,000
Decrease in inventory $27,000
Decrease in accounts payable $44,000
Increase in retained earnings $38,000
Cash received from sale of building $224,000
Gain on sale of building $56,000
Depreciation expense $41,000
Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided (used) by operating activities?
$(62,000)
$50,000
$306,000
$212,000

Answer 1

Majorn uses the indirect method to prepare its statement of cash flows his net cash used by operating activities is $(62,000).

What is a cash flow?

• A business's overall inflow and outflow of cash are known as cash flow. It serves as a crucial gauge of your company's financial health.
• You can pay expenditures, put money into new prospects, and expand your firm with a steady, positive cash flow.
• The three categories of cash flow are operating, investing, and financing cash flow.
• In order to fulfill your current financial responsibilities and make plans for the future, you need to have a positive cash flow. But for small firms, cash flow is a regular problem.
• When the amount of money leaving the organization exceeds the amount of money coming in, there is a cash flow issue.

To learn more about cash flow refer to:

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