9. S Company reported net income for 2016 in the amount of $400,000. The company's financial statements also included the following:Increase in accounts receivable$80,000Decrease in inventory 60,000 Increase in accounts payable 200,000Depreciation expense104,000Gain on sale of land148,000 What is net cash provided by operating activities under the indirect method?

Net cash provided by operating activities = 536,000

Explanation:

When calculating net cash using the indirect method, we have to start at net income and then add any increase in liability to it as increase in liabilities mean that cash wasn't used for that particular transaction, also add any decrease in assets because we receive cash when assets such as accounts receivable decrease, also subtract any increase in asset because when accounts receivable increase we do not receive cash but a promise to receive cash at a future date, subtract any decrease in liability because in order to decrease liabilities we have to pay in cash. Also we have to add depreciation to net income as it is a non cash expense. We will subtract the gain on sale because we record only the net cash from the sale and not the gain or loss.

400,000 (Net income we start from here)

-80,000 (Accounts receivable an asset is increasing so we subtract)

+60,000 (Inventory an asset is decreasing so we add)

+200,000 (Accounts payable a liability is increasing so we add)

+104,000 (Depreciation is non cash expense so we add)

-148,000 (Gain on sale is subtracted)

Net cash provided by operating activities = 536,000