During the Year, the Train Stop Decreased Its Accounts Receivable

question 281

Multiple Choice

During the year, The Train Stop decreased its accounts receivable by $60, increased its inventory by $130, and decreased its accounts payable by $20. For these three accounts, the firm has a net:

• A) $90 use of cash.
• B) $50 use of cash.
• C) $170 use of cash.
• D) $90 source of cash.
• E) $50 source of cash.

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Definitions:

Exchange of Assets

A transaction where companies swap ownership of assets without the use of cash, often to achieve operational efficiencies or strategic objectives.

Fair Value

is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Replacement Value

The cost to replace an asset with another of similar function and efficiency.

AASB 138

The Australian Accounting Standards Board standard that specifies the accounting treatment for intangible assets not covered by other standards.