During the year, Engine Engineering Corporation has operating expenses of $30,000. There was an increase in prepaid expenses of $5,000 and an increase in accrued liabilities of $7,000. What were Engine's cash payments for operating expenses?
A) $42,000
B) $32,000
C) $28,000
D) $18,000

Question

Quizplus · Accepted Answer

To calculate the cash payments for operating expenses, we need to adjust the operating expenses with the changes in prepaid expenses and accrued liabilities.

Adjusted operating expenses = operating expenses + increase in prepaid expenses - increase in accrued liabilities

= $30,000 + $5,000 - $7,000

= $28,000

Hence, the cash payments for operating expenses were $28,000. Therefore, option C is the correct answer.

During the Year, Engine Engineering Corporation Has Operating Expenses of $30,000