Jodi Lein, small business consultant, is currently working with RJ Landscaping, a sole proprietorship. She is trying to educate the owner on the importance of monitoring cash flows. Operating information as of the end of the most recent month appears below:
Cash from sale of truck of $7,000.
Cash salaries paid of $17,000.
Cash from customers of $45,000.
Depreciation expense of $5,500.
Interest on bank line of credit of $1,000.
Cash paid to suppliers of $22,000.
Other cash expenses, including rent, of $6,300.
No taxes due.
Using this information, what is the cash flow from operations for the month?
A) -$1,300.
B) $11,200.
C) -$300.
Correct Answer: A
I am a little confused by the answer given. Isn't "cash from sale of truck $7000" a gain on sale of equipment (primary business is landscaping and not selling trucks) thus an investing activity and not operating cash flow?? What I am missing here?
Someone enlighten me please....
Edited 1 time(s). Last edit at Monday, October 26, 2009 at 12:10AM by investragy. |
发表于 2011-7-13 16:33
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