Catalina Company reported a net loss of $15,000 for the year ended December 31, 2017. During the year, accounts receivable decreased $7,500, inventory increased $12,000, accounts payable increased by $15,000, and depreciation expense of $9,000 was recorded. During 2017, operating activities
A)used net cash of $4,500.
B)used net cash of $10,500.
C)provided net cash of $4,500.
D)provided net cash of $10,500.

Question

Quizplus · Accepted Answer

The net cash provided by operating activities is calculated by adjusting the net loss with changes in working capital and non-cash expenses. Starting with a net loss of $15,000, add back the depreciation expense of $9,000 (a non-cash charge), add the decrease in accounts receivable of $7,500 (cash inflow), subtract the increase in inventory of $12,000 (cash outflow), and add the increase in accounts payable of $15,000 (cash inflow). The net cash provided is $4,500.

Catalina Company Reported a Net Loss of $15,000 for the Year