Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Operating Activities: Direct Method

Financial Accounting

13. Statement of Cash Flows

Operating Activities: Direct Method

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Multiple Choice

During the year, cash paid to suppliers was $340,000. Cash received from customers was $580,000. Cash paid for operating expenses totaled $64,000. Depreciation expense totaled $16,000. The company also purchased equipment for $35,000. Using the direct method, what is the cash provided by operating activities?

$125,000

$141,000

$160,000

$176,000

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Verified step by step guidance

Identify the cash inflows and outflows related to operating activities. In this problem, cash received from customers is an inflow, and cash paid to suppliers and cash paid for operating expenses are outflows.

Calculate the total cash inflows from operating activities. Here, the cash inflow is the cash received from customers, which is $580,000.

Calculate the total cash outflows from operating activities. This includes cash paid to suppliers ($340,000) and cash paid for operating expenses ($64,000).

Subtract the total cash outflows from the total cash inflows to determine the net cash provided by operating activities. This is done by subtracting the sum of cash paid to suppliers and cash paid for operating expenses from the cash received from customers.

Note that depreciation expense is a non-cash item and does not affect the cash flow calculation when using the direct method. Similarly, the purchase of equipment is an investing activity and does not impact the cash provided by operating activities.