Question

Pare Company reported a net loss of $30,000 for the year ended December 31, 2014. During the year, accounts receivable decreased $15,000, merchandise inventory increased $25,000, accounts payable increased by $30,000, and depreciation expense of $20,000 was recorded. During 2014, operating activities (Points : 1) used net cash of $10,000. used net cash of $25,000. provided net cash of $25,000. provided net cash of $10,000.

Answer 1

Answer:

provided net cash of $10,000

Explanation:

The computation of the cash flow from operating activities is shown below:

Cash flow from operating activities

Net loss -$30,000

Add: depreciation expense $20,000

Add: Decrease in account receivable $15,000

Less: Increase in merchandise inventory -$25,000

Add: Increase in account payable $30,000

Net cash flow provided by operating activities is $10,000

The positive sign reflects the inflow of cash while the negative sign reflects the outflow of cash