Question

please help i am confused

11. Which of the following should be added to net income in calculating net cash flow from operating active using the indirect method? a depreciation expense b. an increase in inventory c a gain on the sale of equipment d dividends declared and paid 12. The following information is available from the current period financial statements Net income Depreciation expense Increase in accounts receivable Decrease in accounts payable $165,000 28.000 16,000 21,000 The net cash flow from operating activities using the indirect method is a $230,000 b. S188,000 c. $198.000 d. $156,000 13. Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is a. $55,000 b. $50,000 c. $65,000 d. $60,000 14. Zenith Corporation sells some of its used store fixtures. The acquisition cost of the fixtures is $12.500, the accumulated depreciation on these fixtures is 59,750 at the time of sale. The fixtures are sold for $5,300. The value of this transaction in the Investing section of the statement of cash flows is: a. $12,500 b. $5,300 c. $2,750 d. $2,550 15. A corporation uses the indirect method for preparing the Statement of Cash Flows. A fixed asset has been sold for $25,000 representing again of $4,500. The value in the operating activities section regarding this event would be: a $25,000 b. ($4,500) c. $29,500 d. $4,500

Answer 1

Question	Answer
11	a	Depreciation expense
12	d	$                     156,000
13	a	$                        55,000
14	b	$                          5,300
15	b	$                        (4,500)

Explanations:

Question	Answer		Explanations
11	a	Depreciation expense	Using the indirect method, Depreciation expenses is added back as it is a non-cash expense.
12	d	$                       156,000	Cash flow from operating activities = 165,000 + 28,000 - 16,000 - 21,000
13	a	$                         55,000	Dividend paid = 10,000 + 50,000 - 5,000
14	b	$                            5,300	Cash flow from investing activities includes the amount received from sale of a fixed asset. So, amount received $ 5300 is relevant amount only.
15	b	$                          (4,500)	Cash flow from operating activities includes any gain from sale of a fixed asset. It is deducted as it is a non-operating income.

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