The following information is available from the current period financial statements:Net income$ 141,238Depreciation expense$36,864Increase in accounts receivable$15,924Decrease in accounts payable$23,055The net cash flow from operating activities using the indirect method isa.$217,081b.$139,123c.$111,505d.$88,450

Name: The following information is available from the current period financi
Uploaded: 2024-03-05T11:47:04.000Z
Channel: Bartleby
Description: The following information is available from the current period financial statements:Net income$ 141,238Depreciation expense$36,864Increase in accounts receivable$15,924Decrease in accounts payable$23,055The net cash flow from operating activities usi

As per the given information, the net cash flow from operating activities using the indirect method can be calculated as follows: Cash flow from operating activities = Net Income + Depreciation expense - Increase in accounts receivable - Decrease in accounts payable = $141,238 + $36,864 - $15,924 - $23,055 = $139,123. Therefore, Net Cash flow from operating activities = $139,123 Option b is the correct answerTo find cash flow from operating activities, the adjustment of depreciation expense is given to the net income i.e the depreciation expense is added to the net income because depreciation expense is a non-cash item and hence the same is not a cash outflow of the company, however the same has been already deducted in the net income in income statement the same is added back to the net income. Increase in accounts receivable represents cash outflow as the number of accounts receivable has been increased from the previous period and hence the same is deducted from net income to ascertain cashflow. The decrease in accounts payable represents cash outflow as the amount of accounts payable has been decreased from the previous period and hence the same is deducted from net income to ascertain cashflow.