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      Question

      ABC Ltd. Had incurred $141,000 in expenses for the year.

      These expenses included depreciation expense of $8,500 and an increase in accounts payable of $2,400. How much cash did the company pay for expenses?
      A $100,000 Correct Answer Incorrect Answer
      B $105,000 Correct Answer Incorrect Answer
      C $106,000 Correct Answer Incorrect Answer
      D $141000 Correct Answer Incorrect Answer
      E $130,100 Correct Answer Incorrect Answer

      Solution

      Total expenses are $141,000. Depreciation expense is a non-cash item. The increase in accounts payable means that $2,400 of the expense was posted to a liability account, not paid in cash. Cash payments are $141,000 – $8,500 – $2,400 = $130,100.

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