Identify Each of the Following as Increasing (+) or Decreasing

question 84

Essay

Identify each of the following as increasing (+) or decreasing (-) cash flows from operating activities (O), investment activities (I), or financing activities (F). (EXAMPLE: the sale of plant and equipment would increase cash flows from investing activities, and the correct answer would be +I).
_______ 1. Increase in accounts payable
_______ 2. Decrease in inventory
_______ 3. Net income from operations
_______ 4. Payment of dividends
_______ 5. Sale of preferred stock
_______ 6. Increase in accrued expenses
_______ 7. Purchase of new equipment
_______ 8. Decrease in amortization expense
_______ 9. Increase in accounts receivable
_______ 10. Decrease in notes payable
_______ 11. Increase in net worth
_______ 12. Increase in long-term liabilities
_______ 13. Increase in investments
_______ 14. Decrease in marketable securities
_______ 15. Reduction in retained earnings
_______ 16. Repurchase of common shares outstanding
_______ 17. Increase in prepaid expense
_______ 18. Decrease in income taxes payable
_______ 19. Retirement of long-term bonds payable
_______ 20. Sale of new common stock

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Definitions:

Pure Rate

The interest rate that reflects only the time value of money.

Liquidity Risk Premium

The additional return demanded by investors for holding assets that are not easily convertible into cash without a significant loss in value.

Savings Equals Investment

A principle in macroeconomics indicating that within an economy, total savings in a period must equal total investments.

Economic Principle

A fundamental concept or guiding theory that forms the basis of economic analysis and decision-making.