Aaron Inc.reported operating expenses during 2019 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 2019?
A)$702,000.
B)$622,000.
C)$667,000.
D)$703,000.

Question

Quizplus · Accepted Answer

To find out the cash paid for operating expenses, we need to adjust the changes in prepaid expenses and accrued liabilities to the total operating expenses.

Adjusted operating expenses = operating expenses + increase in prepaid expenses - increase in accrued liabilities
Adjusted operating expenses = $765,000 + $25,000 - $43,000
Adjusted operating expenses = $747,000

Next, we need to add back the depreciation expense, which is a non-cash expense.

Cash paid for operating expenses = Adjusted operating expenses + Depreciation expense
Cash paid for operating expenses = $747,000 + $80,000
Cash paid for operating expenses = $827,000

Therefore, the best choice is C, $667,000.

Aaron Increported Operating Expenses During 2019 of $765,000 (Including $80,000 of of Depreciation