Shaw Associates Uses the Indirect Method for Preparing the Statement

question 92

Multiple Choice

Shaw Associates uses the indirect method for preparing the statement of cash flows.The following accounts and balances were drawn from the company's accounting records: $\begin{array}{|l|c|c|}\hline \text { Account Title } & {\text { Begining }} & {\text { Ending }} \\\hline \text { Accounts receivable } & \$ 30,000 & \$ 40,000 \\\hline \text { Prepaid insurance } & \$ 4,600 & \$ 1,000 \\\hline \text { Accounts payable } & \$ 24,000 & \$ 25,800 \\\hline \text { Unearned revenue } & \$ 6,400 & \$ 3,800 \\\hline\end{array}$ Net income for the period was $42,000.The net cash flows from operating activities equals:

• A) $37,200.
• B) $34,800.
• C) $49,200.
• D) $40,000.

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