Analyzing the cash flow effects of different types of expenses
The following income statements are available for Hopi, Inc., and Zuni, Inc., for 2012.
| Hopi, Inc. | Zuni, Inc. |
Revenue | $100,000 | $100,000 |
Wages expense | 70,000 | 55,000 |
Depreciation expense | 10,000 | 25,000 |
Net earnings | $ 20,000 | $ 20,000 |
Required
Assume that neither company had beginning or ending balances in its Accounts Receivable or wages Payable accounts. Explain which company would have the lowest net cash flows from operating activities for 2012.
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