Question

Nez Company provided services for $7,500 cash during the 2012 accounting period. Nez incurred $6,000 expenses on account during 2012, and by the end of the year, $3,000 of that amount had been paid with cash. Nez paid dividends of $900 to stockholders during the year. Assume that these are the only accounting events that affected Nez during the 2012 accounting period. What is the cash flow from operation for 2012?

Answer 1

$1,500

Step-by-step explanation:

Nez Company cash flow from operation for 2012 will be computed as follows:

= Operating Revenue - Operating expenses

= $7,500 - $6,000

= $1,500

Dividends paid will not be included in Nez's cash flow from operations since dividends paid relate to financing activities and not operating activities.