Aaron Inc. reported operating expenses during 2017 of $765,000 (including $80,000 of depreciation expense). Prepaid expenses increased $25,000 while accrued liabilities increased $43,000. How much cash was paid for operating expenses during 2017?
A)$702,000.
B)$622,000.
C)$667,000.
D)$703,000.

Question

Quizplus · Accepted Answer

To find the cash paid for operating expenses, adjust the reported operating expenses by changes in prepaid expenses and accrued liabilities, and exclude non-cash depreciation. Cash paid = $765,000 - $80,000 (depreciation) + $25,000 (increase in prepaid expenses) - $43,000 (increase in accrued liabilities) = $667,000.

Aaron Inc Reported Operating Expenses During 2017 of $765,000 (Including $80,000