Question

Minette Company reported net income of $200,000 for the year ended December 31, 2022. During the year, inventories decreased by $40,000, accounts payable decreased by $60,000, depreciation expense was $45,000 and a gain on disposal of equipment of $15,000 was recorded. Net cash provided by operating activities in 2022 using the indirect method was

Answer 1

Net cash provided by operating activities in 2022 using the indirect method was  $210,000.

How does inventory work?

Inventory is the term used to describe all the products, materials, goods, and merchandise that a company has on hand and plans to sell to customers for a profit. The only item that will be regarded as inventory is the newspaper if the vendor delivers newspapers to customers using a vehicle. The car will be handled like an asset.

What function does inventory serve?

The primary purpose of inventory is to guarantee a steady supply of resources for operations. Your company should seek to strike a balance between having enough inventory and not having enough, without ever running out, in order to carry out this function efficiently.

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