Adama Company reported a net loss of $6000 for the year ended December 31 2016. During the year accounts receivable increased $15000 merchandise inventory decreased $12000 accounts payable decreased by $20000 and depreciation expense of $12000 was recorded. During 2016 operating activities
A) used net cash of $17000.
B) used net cash of $29000.
C) provided net cash of $24000.
D) provided net cash of $21000.

Question

Quizplus · Accepted Answer

To calculate the net cash provided or used by operating activities, we need to start with the net loss of $6000, add back depreciation expense of $12000, and then adjust for the changes in current assets and liabilities:
Increase in accounts receivable: -$15000
Decrease in merchandise inventory: +$12000
Decrease in accounts payable: +$20000
Net cash used by operating activities = - $6000 + $12000 - $15000 + $12000 + $20000 = -$17000. Therefore, the correct answer is A) used net cash of $17000.

Adama Company Reported a Net Loss of $6000 for the Year