A company's income statement for the year shows a net loss of $90,000. Additional information for the year follows: What is the net cash provided by (used in) operating activities?

Question

A company's income statement for the year shows a net loss of $90,000. Additional information for the year follows:  What is the net cash provided by (used in) operating activities?

Quizplus · Accepted Answer

To calculate the net cash provided by operating activities, we need to start with the net loss figure and make adjustments for non-cash expenses and changes in current assets and liabilities. We can see from the additional information provided that the company had depreciation and amortization expenses of $7,000 and an increase in accounts payable of $5,000. However, the company also had an increase in accounts receivable of $21,000 and a decrease in inventory of $10,000, both of which represent cash outflows. Therefore, the calculation for net cash provided by operating activities is:
Net loss: ($90,000)
Depreciation and amortization: $7,000
Increase in accounts payable: $5,000
Increase in accounts receivable: ($21,000)
Decrease in inventory: $10,000
Net cash provided by (used in) operating activities: ($99,000)

A Company's Income Statement for the Year Shows a Net