Expenses reported on the income statement for 20A (the first year of operations),totaled $60,000,which included depreciation expense of $8,000,and wages payable increased to $3,000 by the end of 20A.Therefore,the 20A cash outflow for expenses was $71,000.
Calculation: $60,000-8,000-3,000 = $49,000

Question

Quizplus · Accepted Answer

The calculation is incorrect. The wages payable increase of $3,000 should not be added back to the expenses reported on the income statement. The correct calculation would be $60,000 - $8,000 = $52,000 in cash outflow for expenses in 20A.

Expenses Reported on the Income Statement for 20A (The First