A Company Reported Net Income of $200,000 During 2014

question 113

Multiple Choice

A company reported net income of $200,000 during 2014. The company reported depreciation expense of $35,000, patent amortization of $10,000 and a $5,000 loss on the sale of equipment. Using the indirect method, how much is the company's cash flow from operating activities?

• A) $245,000.
• B) $250,000.
• C)$240,000.
• D)$235,000.

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Definitions:

Straight-Line Depreciation

A method for divvying the expense of a tangible asset through its operational duration in equivalent annual amounts.

Incremental Sales

The additional sales generated by a particular business activity or decision.

Operating Expenses

Expenses that are incurred during the normal operation of a business, excluding the cost of goods sold.

Capital Budgeting

The approach of orchestrating and administering a business's enduring investments towards major initiatives or assets.