ABC Building Company had a net profit of $90,000 in January. If depreciation expense was $10,000, a deposit of $35,000 was placed on a new lot, and accounts payable decreased by $2,000, what is the net change in cash?

To determine the net change in cash for ABC Building Company, you start with the net profit and then adjust for non-cash expenses and changes in working capital.

Net profit for January is given as $90,000. However, net profit includes non-cash items such as depreciation, which does not affect cash flow. Therefore, you add back the depreciation expense of $10,000 to the net profit:

Net Profit: $90,000

Add: Depreciation Expense: $10,000

Total = $100,000

Next, consider cash outflows from investments and changes in working capital. A deposit of $35,000 for a new lot represents a cash outflow, which reduces the cash available:

Total after deposit = $100,000 - $35,000 = $65,000

Now, analyze accounts payable, which represents short-term liabilities. A decrease in accounts payable of $2,000 indicates that the company has paid off some liabilities, which is also an outflow of cash:

Total after payable = $65,000 - $2,000 = $63,000

So, after adjusting for depreciation, the cash outflow from the deposit, and the decrease in accounts payable, the net change