Applegate Ltd. reported a loss of $10,000 for the year. During the year, accounts receivable decreased $3,000, inventory increased $5,000, accounts payable increased by $11,000, and depreciation expense of $6,000 was recorded. Using the indirect method, operating activities
A) used net cash of $23,000.
B) used net cash of $17,000.
C) provided net cash of $5,000.
D) provided net cash of $15,000.

Question

Quizplus · Accepted Answer

The net loss of $10,000 is adjusted for non-cash expenses and changes in working capital. Add back depreciation of $6,000 (non-cash expense), add the decrease in accounts receivable of $3,000, subtract the increase in inventory of $5,000, and add the increase in accounts payable of $11,000. This results in a net cash provided by operating activities of $5,000.