Potter Limited Reported a Net Loss of $10,000 for the Year

question 144

Multiple Choice

Potter Limited reported a net loss of $10,000 for the year ended December 31, 2013. During the year, accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2013, operating activities

• A) used net cash of $2,000.
• B) used net cash of $8,000.
• C) provided net cash of $2,000.
• D) provided net cash of $8,000.

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Definitions:

Accrue Interest

The process of recognizing interest earned or incurred on an outstanding debt over a period of time.

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries made at the end of the previous accounting period, simplifying the recording of transactions.

Liability Account

An account on a company's balance sheet that records debts or obligations the company needs to pay in the future.

Adjusting Entry

Accounting entries recorded at the close of an accounting cycle to distribute expenses and revenues to the period they truly belong to.