Use the Table for the Question(s) Below $\text { AOS Industries Statement of Cash Flows for } 2012$

question 19

Multiple Choice

Use the table for the question(s) below.
$\text { AOS Industries Statement of Cash Flows for } 2012$
$\begin{array}{l}\text { Operating activities }\\\text { Net Income } & 3.2 \\\text { Depreciation and amortisation } & 1.4 \\\text { Cash effect of changes in } & \\\text { Accounts receivable } & 2.1 \\\text { Accounts payable } & 1.1 \\\text { Inventory } & 0.8 \\\text { Cash from operating activities } & 2.8 \\\hline\\\text { Investment activities }\\\text { Capital expenditures } & 2.2 \\\text { Acquisitions and other investing activity } & -0.4 \\\text { h from investing activities } & 2.6\\\hline\\\text { Financing activities }\\\text { Dividends paid } & -1.5 \\\text { Sale or purchase of stock } & 2.1 \\\text { Increase in short-term borrowing } & 1.4 \\\text { Increase in long-term borrowing } & 3.2 \\\text { Cash from financing activities } & 5.2 \\\hline \text { Change in Cash and Cash Equivalents } & \mathbf{5 . 4}\end{array}$
-Consider the above statement of cash flows. In 2012, AOS Industries had contemplated buying a new warehouse for $2 million, the cost of which would be depreciated over 10 years. If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of 2012?

• A) It would have $1,950,000 less cash at the end of 2012.
• B) It would have $150,000 less cash at the end of 2012.
• C) It would have an additional $50,000 in cash at the end of 2012.
• D) It would have $2,000,000 less cash at the end of 2012.

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Definitions:

Congress

The legislative body of the United States government, composed of the House of Representatives and the Senate, responsible for making federal laws.

Military Expenditures

The total financial resources allocated by a government for the maintenance and operations of its armed forces.

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Europe

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