Bath Works Had a Net Loss of $5,100 in 2014

question 4

Multiple Choice

Bath Works had a net loss of $5,100 in 2014. During the year, a gain of $4,000 was recognized on the sale of fully depreciated equipment that had cost $14,000 and had no salvage value. Depreciation expense during the year totaled $17,400. Changes in the following selected accounts occurred during the year: $$\begin{array} { l c } & \text { Increase/(Decrease) } \\\text { Accounts receivable } & \$ 6,500 \\\text { Inventory } & (3,200) \\\text { Interest payable } & 1,200 \\\text { Accounts payable } & (1,000) \\\text { Accumulated depreciation } & 3,400 \\\text { Notes payable } & (6,400) \\\text { Long-term investments } & (9,000) \end{array}$$ Using the indirect method, how much is the company's net cash provided(used) by operating activities?

• A) $15,800
• B) $9,200
• C) $8,800
• D) $5,200

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Definitions:

Price Ratio

The ratio expressing the relative prices of two goods or services, indicating how much of one is needed to trade for one unit of the other.

Marginal Rate

Refers to the rate at which one quantity changes with respect to a change in another quantity, commonly used in the context of taxes and interest rates.

Substitution Effect

The change in consumption of goods in response to a change in their relative prices, holding the consumer's level of utility constant.

Total Utility

The total satisfaction or benefit that a person derives from consuming a certain quantity of goods or services.