A Company Reported the Following Information for a Financial Year

question 4

Multiple Choice

A company reported the following information for a financial year: $\begin{array}{lr}\text { Profit from ordinary activities before incometax expense } & 264000 \\\text { Income tax expense } & 70000 \\\text { Depreciation expense } & 24000 \\\text { Issue of shares } & 120000 \\\text { Loan made to another company } & 24000 \\\text { Increase in accounts receivable } & 8000 \\\text { Decrease in inventories } & 12000 \\\text { Cash received from loans receivable } & 4000 \\\text { Dividends paid } & 16000\end{array}$ What is the net cash inflow (outflow) from financing activities?

• A) $104 000 net cash inflow.
• B) $120 000 net cash inflow.
• C) $124 000 net cash inflow.
• D) $(16 000) net cash outflow.

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Definitions:

Depreciable Cost Basis

The portion of the cost of an asset that can be deducted over time for tax purposes.

Personal-Use Property

Items owned for personal enjoyment or use, such as a residence or car, that typically do not qualify for tax deductions or depreciation.

FMV

Fair Market Value is an estimate of the market value of a property or asset, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller.

§179 Expense

A section of the U.S. tax code that allows a business to deduct the full purchase price of qualifying equipment or software within the tax year.