Hunter Company reported a net loss of $12,000 for the year ended December 31, 2017. During the year, accounts receivable decreased $28,000, inventory increased $20,000, accounts payable increased by $30,000, and depreciation expense of $24,000 was recorded. During 2017, operating activities
A)used net cash of $14,000.
B)used net cash of $50,000.
C)provided net cash of $50,000.
D)provided net cash of $74,000.

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 $12,000, add back the depreciation expense of $24,000 (a non-cash charge), add the decrease in accounts receivable of $28,000 (cash inflow), subtract the increase in inventory of $20,000 (cash outflow), and add the increase in accounts payable of $30,000 (cash inflow). The total is $50,000 net cash provided by operating activities.

Hunter Company Reported a Net Loss of $12,000 for the Year