Question

The current sections of Donny Inc.'s balance sheets at December 31, 2019 and 2020, are presented below. Donny's net income for 2020 was $203,000 Depreciation expense was $25,000 2020 2019 Current Assets Cash Accounts Receivable Inventory Prepaid Expenses Total Current Assets $ 115,000 105,000 154,000 27 000 $ 401,000 $ 99,000 89,000 172,000 21,000 $ 381,000 Current Liabilities: Accrued Expenses Payable Accounts Payable Total Curent Liabilities $ 15,000 85,000 $ 100,000 $ 5,000 93.000 $ 98,000 Net cash inflows from operating activities are $226,000 O True O False

Answer 1

Calculate net cash flow from operating activities as shown below:
Net income	$203,000
Add: Depreciation	$25,000
Increase in accounts receivable	-$16,000	(89000-105000)
Decrease in inventories	$18,000	172000-154000
Increase in prepaid expense	-$6,000	21000-27000
Increase in accrued expenses payable	$10,000	15000-5000
Decrease in accounts payable	-$8,000	85000-93000
Net cash flow from operating activities	$226,000
Thus, net cash inflow from operating activities is $226,000 and thus statement is true.