Atkins Limited Classifies Interest Paid and Interest Received as Operating

question 16

Multiple Choice

Atkins Limited classifies interest paid and interest received as operating activities. Atkins Limited had the following cash flows during the reporting period: Consideration paid to acquire a subsidiary, net of cash acquired $150 000
Dividends paid $30 000
Repayment of borrowings $60 000
Interest paid on borrowings $24 000
Proceeds from sale of plant $100 000
The amount of the cash flows in relation to financing activities of Atkins Limited for the reporting period is:

• A) Net cash inflow $90 000.
• B) Net cash outflow $90 000.
• C) Net cash inflow $30 000.
• D) Net cash outflow $30 000.

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Definitions:

Stockholders' Equity

Stockholders' equity, or shareholders' equity, represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributed to shareholders.

Overstatement

The action of stating or estimating a quantity or value more highly than is justified by the available evidence.

Inventory Turnover

A measure of how many times a company's inventory is sold and replaced over a specific period.

Cost of Goods Sold

The direct costs attributable to the production of goods sold in a company, including materials and labor.