Question

Stolberg Company reported a net loss of $12,000 for the year ended December 31, 2022. 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 2022, operating activities

Group of answer choices

used net cash of $14,000.

used net cash of $50,000

provided net cash of $50,000

provided net cash of $74,000

Answer 1

The cash flow from operating activities are the cash generated or used by the operating activity during the period, operating activities are the general business activities used for smooth flow of companies operations.

The cash flow from opearting activities begins with the net opearting income or loss and any non cash expenses are adjusted to it i.e added to it. After this the changes in working capital is adjusted with it . In case of current assets i.e inventories , accounts receivable when assets reduce it is added and when assets increase it is reduced from operating income/loss. In case of current iabilities such as accounts payable, provisions etc, if they increase they are added and if they decrease they are reduced.

Accordingly in the given case :

Begin with Net  loss = -$12000 , then add the non cash expenses of $ 24000, then add the increase in accounts payable = $30000, then add the increase in accounts receivable of $28000 and finally reduce the increase in inventory = $20000

Thus

	Net Loss	-12000
Add:	Depreciation	24000
Add:	Increase in Accounts payable	30000
Add:	Decrease in accounts receivable	28000
		70000
Less:	Decrease in Inventories	20000
	Net Cash Provided	50000

Thus the net cash provided from operating activities = $50000,

The correct Option is --- C i.e provided net cash of $50,000