Operating expense are the expense the business in selling goods or providing services and managing the company. These are usually dividend into selling and administrative expense and includes item such as adverting expense, salaries and wages, insurance expense, tax expense and deprecation. These expense are recognized when goods are used, not when cash is paid. To compute: What is the amount of cash paid for operating expense that Romo would report on its statement of cash flow under the direct method?

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 13MCQ

To determine

Introduction:

Operating expense are the expense the business in selling goods or providing services and managing the company. These are usually dividend into selling and administrative expense and includes item such as adverting expense, salaries and wages, insurance expense, tax expense and deprecation. These expense are recognized when goods are used, not when cash is paid.

To compute:

What is the amount of cash paid for operating expense that Romo would report on its statement of cash flow under the direct method?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Using the Exhibit below, assume that the balance of Accounts Receivable was $61,000 at the beginning of the current year. Furthermore, assume that the balance of Accounts Receivable is $62,000 at the end of the current year. When preparing the Statement of Cash Flow using the indirect method for the current year, which of the following statements would describe the proper presentation of accounts receivable on the Cash flow from operating activities section? EXHIBIT Increase (Decrease) Net Income (loss) $XXX Adjustments to reconcile net income to net cash flow from operating activities: Depreciation of fixed assets XXX Losses on disposal of assets XXX Gains on…

The cash flows from (used for) operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $558,800 and accounts receivable decreased by $39,700 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $38,900 and income tax payable decreased by $4,500 during the year, what was the amount of cash paid for income taxes?$fill in the blank 2 c. Briefly explain why the cash received from customers in part (a) is different from sales.Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $39,700 during the current year.

Use the appropriate information from the data provided below to calculate the net cash provided (used) by operating activities for the period. Net income Accounts receivable increase (for the period) Inventory decrease (for the period) Proceeds from the issuance of long-term debt Accounts payable decrease (for the period) Purchases of equipment Depreciation and amortization expense $ 113,000 24,000 19,000 260,000 11,000 175,000 42,000