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:

Variable Costs

Expenses that fluctuate in direct proportion to changes in the level of business activity or production volume, such as raw materials and direct labor.

Machine Hours

A measure of the amount of time a machine is operated, used in allocating manufacturing costs to products.

Sales Mix

The composition of different products or services sold by a company, indicating the proportion each contributes to total sales.

Special Order

A custom or one-time order that may require special pricing or production adjustments.