A company has Net Income of $20, which included $4 of depreciation expense. There were no
other noncash expenses in Net Income and there were no gains or losses. Accounts receivable
was $40 at the beginning of the year and $25 at the end of the year. Accounts Payable was $25 at
the beginning of the year and $15 at the end of the year. Inventory was $22 at the beginning of
the year and $27 at the end of the year. All other balance sheet accounts were unchanged over
the year. What was the company
Solution
Net Profit      20
Add:
Depreciation                                  Â
   4
Add/Less: change in current items
Decrease in accounts receivable               15
Decrease in accounts payable                 (10)
Increase in
Inventory                                (5)
Cash flow from operating Activities            $24
so the correct option is "D" = $24