Answer (B) is correct . The change in cash can be calculated as follows: Accrual-basis net income $100,000 Less:? capital outlays (50,000) Less:? increase in working capital (25,000) Add:? depreciation expense (noncash) 15,000 Increase in cash $? 40,000
Answer (A) is incorrect because The increase in working capital is not the only line item that affects cash.
Answer (C) is incorrect because The amount of $90,000 ignores the outlays for capital expenditures.
Answer (D) is incorrect because Improperly adding the capital outlays and increase in working capital and subtracting the depreciation expense results in $160,000.
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From the information provided above, the increase in Steers’ cash account for the coming year will be