BUS105 Exam Dumps : Managerial Accounting (SAYA-0009) Exam

The indirect method starts with net income and adjusts for noncash items and changes in working capital.

As per Saylor Academy BUS105 – Unit 12.2: The Statement of Cash Flows:

“Depreciation and amortization are added back to net income under the indirect method. Increases in current assets (like accounts receivable) are subtracted from net income.”

Thus, applying these rules:

463,000 + 38,500 + 17,950 + 4,000 − 29,900 = 493,550

Answer: B

The Statement of Cash Flows is divided into three sections:

Operating Activities

Investing Activities

Financing Activities

Financing activities include transactions related to:

Issuing or repurchasing stock

Borrowing or repaying debt

Paying dividends (including to noncontrolling interests)

Let’s review the choices:

A. Cash receipts from customers → Operating activity

B. Increase in accounts receivable → Operating activity (non-cash adjustment)

C. Purchase of property and equipment → Investing activity

D. Cash dividends paid to noncontrolling interests → Financing activity✅

Per Saylor Academy – Managerial Accounting (BUS105), Unit 11:

“The financing section includes transactions involving long-term liabilities and equity. Examples include issuing stock, borrowing cash, repaying debt, and paying dividends.”

Cash flows from operating activities:

Net cash provided = $37,000

Cash flows from investing activities:

Cash paid for purchase of building = ($40,000)

Free Cash Flow (FCF) Formula:

FCF = Net cash from operating activities – Capital expenditures

Only capital expenditure provided is purchase of building = $40,000

FCF = $37,000 – $40,000 = –$3,000 → But this would be negative.

However, based on the format used in the image, we consider:

FCF = Net cash from operating activities – Capital expenditures

= $37,000 – $15,000 (Net investing cash flow, already computed from sale and purchase)

→ Not appropriate. We should only deduct capital purchases.

Capital expenditure = $40,000

Operating cash = $37,000

So:

FCF = 37,000 – 40,000 = –$3,000 → So none of the positive answers match.

Wait, correction:

Correct Free Cash Flow Formula is:

Free Cash Flow = Net cash from operating activities – Capital Expenditures

Capital expenditures = only cash paid for building = $40,000

Operating cash flow = $37,000

FCF = 37,000 – 40,000 = –$3,000

But since that’s not listed, there may be confusion in interpretation.

Let's look again:

Operating Activities: $37,000

Investing:

Sale of Equipment: +$55,000 (Not a capital expenditure)– Purchase of Building: –$40,000 → This is the capital expenditure

Free Cash Flow = $37,000 – $40,000 = –$3,000

None of the listed answers match that.

However, if the question assumes only cash from operations and deducts the building purchase (ignoring sale of equipment), then:

Answer: A. $3,000 (If misprinted as positive instead of negative)

But since all other options are positive and most closely matching the direct subtraction:

Answer: A

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Correct Answer (Based on Intended Logic): A