Answer:
Net Cash flow from operating = $ 1,722,000 Â
Explanation:
To determine the net cash flow from operating activities. We will adjust the net income as follows; all decrease in assets and increase in liabilities are added and all increase in assets and decrease in liabilities are subtracted.
All non- cash expenses would be added back and all non-cash income would be deducted from the net income. Notable here is depreciation a non-cash expense which must be added back to the net income
This principle is applied below:
                                $
Net Income                     1,400,000
Adjustments:
Add depreciation expense         224,000
Add decrease in current asset      490,000   Â
less decrease in current liabilities   (392,000)   Â
Net Cash flow from operating       1,722,000 Â
Net Cash flow from operating = $ 1,722,000 Â