If 'other expenses' in the profit and loss report is $35,000 including $8,000 of depreciation, accrued 'other expenses' at the beginning of the year is $1,000 and $0 at the end of the year, the figure for 'other expenses' that will appear in the statement of cash flows for the year is:

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Quizplus · Accepted Answer

The depreciation in 'other expenses' is a non-cash expense and thus needs to be added back to arrive at the cash flow from operating activities. Therefore, the cash flow from operating activities for 'other expenses' is $35,000 - $8,000 = $27,000. Also, since there is an accrued expense at the beginning of the year and no accrued expense at the end of the year, the cash outflow for 'other expenses' for the year is $27,000 - $1,000 = $26,000. However, since we are looking for the figure that will appear in the statement of cash flows, we need to consider the change in the current liabilities. The decrease in the accrued 'other expenses' will result in a decrease in the current liabilities, which means it will be added back in the statement of cash flows. Therefore, the final figure for 'other expenses' that will appear in the statement of cash flows is $26,000 + $2,000 (decrease in accrued expenses) = $28,000.

If 'Other Expenses' in the Profit and Loss Report Is