In this video, we demonstrate how to calculate the cash expenses in a CFA exam question. This video requires Flash 8 or above. If it does not start, click the play button to start.

Given the following, find the cash payment:

Total operating expenses = $10k

Amortization = $1k

Depreciation = $500

Liability at the beginning of the period = $20k

Liability at the end of the period =$18k

Prepaid at the beginning of the period = $5k

Prepaid at the end of the period = $6k

Answer:

Cash payment = 10k – 1k -0.5k + (20k – 18k) + (6k – 5k) = 11.5k

Please see the video for explanation.