The company started when it acquired $18,000 cash by issuing common stock. Purch

Question

The company started when it acquired $18,000 cash by issuing common stock.

Purchased a new cooktop that cost $16,400 cash.

Earned $20,700 in cash revenue.

Paid $10,300 cash for salaries expense.

Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $2,100. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.

Would the cash flow from operating activities be affected by depreciation in 2018?

Yes

No

Explanation / Answer

Depreciation is non cash expense and cash flow from operating activities includes cash revenue and cash expense so depreciation would not affect cash flow from operating activities.

So answer is No

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