Question

Beta Electronics earned net income of $20,000. Included in the net income was $2,000 of depreciation expense. Current assets increased by $2,000 and current liabilities increased by 1,000. How much cash is provided by operating activities?

Answer 1

Answer:

$21,000

Step-by-step explanation:

Given,

Net income = $20,000

Depreciation = $2,000

Current assets (increase) = $2,000

Current liabilities (increase) = $1,000

Note: An increase in current assets is a reduction in cash balance while an increase in current liabilities is an increase in cash

Considering the note above,

Cash is provided by operating activities = 20000 + 2000 - 2000 + 1000

                                                                   = $21,000