Question

Smith and Associates had $65,000 in cash at year-end 2012 and $35,000 in cash at year-end 2013. Cash flow from long-term investing activities totaled $–290,000, and cash flow from financing activities totaled $170,000. What was the cash flow from operating activities?

a) $150,000
b) $90,000
c) $-150,000
d) $-20,000
e) $-90,000

In 2012, Hoosier Sports Co. had net income of $–40,000. If accruals increased by $30,000, receivables and inventories rose by $150,000, and depreciation and amortization totaled $10,000, what was the firm’s cash flow from operating activities?

a) $-150,000
b) $150,000
c) $70,000
d) $90,000
e) $-170,000

Answer 1

Answer to Question 1.

Option b i.e. $90,000 is Correct.

Cash Balance, Ending = Cash Balance, Beginning + Net Increase / (Decrease) in Cash from Various activities
$35,000 = $65,000 + Net Increase / (Decrease) in Cash from Various activities
Net Decrease in Cash from Various activities = -$30,000

Net Decrease in Cash from Various activities = Cash Flow from Operating Activities + Cash Flow from Investing Activities + Cash Flow from Financing Activities
-$30,000 = Cash Flow from Operating Activities - $290,000 + 170,000
Cash Flow from Operating Activities = $90,000

Answer to Question 2.

Option a i.e. -$150,000 is Correct.