Adama Company reported a net loss of $6,000 for the year ended December 31, 2017. During the year, accounts receivable increased $15,000, inventory decreased $12,000, accounts payable decreased by $20,000, and depreciation expense of $12,000 was recorded. During 2017, operating activities
A) used net cash of $17,000.
B) used net cash of $29,000.
C) provided net cash of $24,000.
D) provided net cash of $21,000.

Question

Quizplus · Accepted Answer

The net cash used in operating activities is calculated by adjusting the net loss with changes in working capital and non-cash expenses. Starting with a net loss of $6,000, add back the non-cash depreciation expense of $12,000. Adjust for changes in working capital: subtract the increase in accounts receivable ($15,000), add the decrease in inventory ($12,000), and subtract the decrease in accounts payable ($20,000). The calculation is: -$6,000 + $12,000 - $15,000 + $12,000 - $20,000 = -$17,000.

Adama Company Reported a Net Loss of $6,000 for the Year