Use the following information to calculate cash flows from operations using the indirect method. Net Income$12000 Depreciation Expense1000 Loss on sale of machinery 500 Increase in Accounts Receivable 2000 Decrease in Accounts Payable1500 Increase in Income taxes payable 500 Repayment of Bonds 3000
A．
| A. Increase in cash of $ 9500. |
B．
| B. Decrease in cash of $ 8500. |
C．
| C. Increase in cash of $10500. |
参考答案：C
解析：Cash flow from operations would be calculated as +Net Income $12000+Depreciation $1000+ Loss on sale of machinery $ 500-AZR $ 2000-A/P $ 1500+Income taxes payable $ 500= $10500. Repayment of Bonds is a financing activity and would not be included with operating activities. Depreciation is not a cash flow activity and is therefore always added back to net income to calculate CFO. The loss on the sale of machinery is not a cash outflow so it is also added back to calculate CFO. Accounts receivable is subtracted when there is an increase as this increases net income but does not affect cash.