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Answer (A) is correct . Depreciation and amortization are noncash expenses and are added to net income. A decrease in receivables indicates that cash collections exceed sales on an accrual basis, so it is added to net income. To account for the difference between cost of goods sold (a deduction from income) and cash paid to suppliers, a two-step adjustment of net income is necessary. The difference between cost of goods sold and purchases is the change in inventory. The difference between purchases and the amount paid to suppliers is the change in accounts payable. Accordingly, the conversion of cost of goods sold to cash paid to suppliers requires deducting the inventory increase and adding the accounts payable increase. An increase in plant assets indicates an acquisition of plant assets, causing a decrease in cash, so it is deducted. An increase in contributed capital represents a cash inflow and is added to net income. A?decrease in short-term notes payable is deducted from net income because it reflects a cash outflow. Thus, cash increased by $11,000 ($70,000 NI + $14,000 + $1,000 + $2,000 – $9,000 + $4,000 – $47,000 + $31,000 – $55,000).

Answer (B) is incorrect because This amount results from subtracting the amortization and the decrease in receivables and adding the increase in inventories.
Answer (C) is incorrect because This amount results from adjusting net income for the increase in plant assets and the increase in contributed capital only.
Answer (D) is incorrect because This amount results from not making the adjustments for receivables, inventories, notes payable, and accounts payable.