Changes in the Cash Account [LO4] Indicate the impact of the following corporate actions on cash, using the letter I for an increase, D for a decrease, or N when no change occurs:
a. A dividend is paid with funds received from a sale of debt.
b. Real estate is purchased and paid for with short-term debt.
c. Inventory is bought on credit.
d. A short-term bank loan is repaid.
e. Next year’s taxes are prepaid.
f.
g. Sales are made on credit.
h. Interest on long-term debt is paid.
i. Payments for previous sales are collected.
j. The accounts payable balance is reduced.
k. A dividend is paid.
l. Production supplies are purchased and paid for with a short-term note.
m. Utility bills are paid.
n. Cash is paid for raw materials purchased for inventory.
o. Marketable securities are sold.
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Chapter 18 Solutions
Fundamentals of Corporate Finance
- A review of the statement of financial position of Matvei Company revealed the following changes in the account balances: Required: 1. For each of the above items, indicate whether it produces a cash inflow or a cash outflow. a. Increase in accounts receivable Cash outflow b. Increase in retained earnings c. Decrease in salaries payable d. Increase in common shares e. Decrease in inventory f. Increase in accounts payable g. Decrease in long-term debt h. Increase in property, plant, and equipment 2. Classify each change as a cash flow from operating activities (indirect method), a cash flow from investing activities, or a cash flow from financing activities. a. Increase in accounts receivable b. Increase in retained earnings c. Decrease in salaries payable d. Increase in common shares e. Decrease in inventory f. Increase in accounts payable g. Decrease in long-term debt h. Increase in property, plant, and equipmentarrow_forwardWhich of the following transactions would result in an increase in capital employed? A. Paying a trade payable in cash B. Writing off a bad debt C. Purchasing on credit D. Repaying a loan E. Selling inventory at a profit F. Increasing the bank overdraft to purchase a non - current assetarrow_forwardIf the bank balance was R10 000 (favourable) at the beginning of the year and R30 000 (unfavourable) at the end of the year, which one of the following statements is correct? O - Tek A. There was a net decrease in cash of R40 000. B. There was a net decrease in cash of R20 000. C. There was a net increase in cash of R20 000 OD. There was a net increase in cash of R40 000.arrow_forward
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