Cash payments for operating expenses

Cash payments for operating expenses - prepaid expenses is...

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Cash payments for operating expenses.  This includes wages and other operating costs. To  calculate the cash payments for operating expenses, two steps are required. First, the amount of  total operating expenses in the income statement of $42,600 is reduced by $14,400 depreciation  expense because depreciation is a non-cash expense. Second, the balance is adjusted for changes  in the balances of related balance sheet accounts. For Brothers' Quintet, Inc., the related balance  sheet accounts and the changes in these account balances are: increase of $142 in prepaid  expenses; increase of $320 in wages payable; and $1,295 decrease in accrued expenses. The  operating expenses before depreciation expense total $28,200. To this total the increase of $142 in 
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Unformatted text preview: prepaid expenses is added, the increase of $320 in wages payable is subtracted, and the decrease of $1,295 in accrued expenses is added to get cash payments to suppliers of $29,317. As with the prior calculations, the calculation changes with the direction of the change in the balances of the related balance sheet accounts. The operating expenses excluding depreciation expense would be decreased by a decrease in the prepaid expenses account's balance, increased by a decrease in the balance of the wages payable account, and decreased by an increase in the balance of the accrued expenses account....
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This note was uploaded on 11/15/2011 for the course ACCT 2310 taught by Professor Staff during the Spring '09 term at Texas State.

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Cash payments for operating expenses - prepaid expenses is...

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