Coronado Company reported a net loss of $6500 for the year ended December 31, 2019. During the year, accounts receivable increased $15000, inventory decreased $12200, accounts payable decreased by $19900, and depreciation expense of $11900 was recorded. During 2019, operating activities:

a. used net cash of $2,000
b. provided net cash of $8,000
c. provided net cash of $2,000
d. used net cash of $8,000

All the options are incorrect.

Explanation:

According to the operating activities section of statement of cash flows, the following statement is as follows:

Net Loss                                                            ($6,500)

Cash flow from operating activities:

Depreciation expense                    $11,900

Accounts receivable increased    ($15,000)

Inventory decreased                       $12,200

Accounts payable decreased       ($19,900)

Net cash changes in operating activities      ($10,800)

Cash flow used by* operating activities        ($17,300)

None of the options are correct. Therefore, Cash flow used by* operating activities = ($17,300).

It reduces the interest paid to finance the good.

Explanation:

Interest is calculations are based on the amount borrowed(the principal amount). A higher principal amount attracts a higher interest fee. When purchasing via credit,  a smart customer will make a deposit payment to reduce the debt element in the transaction.

The item will be purchased partially by cash and party by credit. Since the interest amount is based on the credit advanced, a smart customer will pay reduced interest payments.