Total operating expenses on Ocean Company's income statement for last year totaled $400,000.During the year, accrued liabilities increased by $23,000 and prepaid expenses increased by $16,000.Depreciation expense for the year was $30,000.Based on this information, operating expenses adjusted to a cash basis under the direct method on the statement of cash flows would be:
A) $300,000.
B) $363,000.
C) $272,000.
D) $518,000.

Question

Quizplus · Accepted Answer

Operating expenses adjusted to a cash basis = Total operating expenses - Increased accrued liabilities + Increase in prepaid expenses - Depreciation expense
= $400,000 - $23,000 + $16,000 - $30,000
= $363,000

Total Operating Expenses on Ocean Company's Income Statement for Last