Buster Company reported a net loss of $9,000 for the year ended December 31, 2014. During the year, accounts receivable increased $21,000, inventory decreased $15,000, accounts payable decreased by $30,000, and depreciation expense of $15,000 was recorded. During 2014, operating activities
A) used net cash of $30,000.
B) used net cash of $42,000.
C) provided net cash of $42,000.
D) provided net cash of $27,000.

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 $9,000, add back the non-cash depreciation expense of $15,000. Adjust for changes in working capital: subtract the increase in accounts receivable ($21,000), add the decrease in inventory ($15,000), and subtract the decrease in accounts payable ($30,000). The calculation is: -$9,000 + $15,000 - $21,000 + $15,000 - $30,000 = -$30,000.

Buster Company Reported a Net Loss of $9,000 for the Year