Answer (C) is correct . Net operating cash flow may be determined by adjusting net income. Depreciation is an expense not directly affecting cash flows that should be added back to net income. The increase in accounts payable is added to net income because it indicates that an expense has been recorded but not paid. The gain on the sale of land is an accrual-basis item affecting net income and thus should be subtracted. The dividends paid on preferred stock are cash outflows from financing, not operating, activities and do not require an adjustment. Thus, net cash flow from operations is $4,600,000 ($3,000,000 + $1,500,000 – $200,000 + $300,000).
Answer (A) is incorrect because This amount equals net cash provided by operating activities minus the $400,000 financing activity.
Answer (B) is incorrect because This amount equals net income, plus depreciation.
Answer (D) is incorrect because This amount equals net income, plus depreciation, plus the increase in accounts payable.
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The net cash provided by operating activities in the statement of cash flows for the year ended December?31 should be