A Company Has a Net Cash Inflow from Operating Activities

question 20

Multiple Choice

A company has a net cash inflow from operating activities of $789,000, a net cash outflow of $50,000 from investing activities and a net cash inflow of $100,000 from financing activities. The company paid $124,000 in interest, $186,500 in income taxes, and $200,000 in dividends. Which of the following statements about the Statement of Cash Flows is NOT true:

• A) Dividends of $200,000 will be reported as a cash outflow in the cash flow from investing activities section.
• B) Supplemental disclosures required for a company using the indirect method include the amount of interest and the amount of income taxes paid.
• C) The Statement of Cash Flows will show a net increase to cash and cash equivalents of $839,000.
• D) If the direct method is used, the $124,000 of interest paid and the $186,500 of income taxes paid will be reported in the cash flows from operating activities.

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Definitions:

Hypopharynx

The lower part of the pharynx that sits behind the larynx and connects to the esophagus, involved in the passage of food and air.

Laryngopharynx

The lower part of the pharynx, located near the larynx, that facilitates the passage of air to the lungs and food to the esophagus.

Digestive Enzymes

Proteins secreted by the digestive system that break down food into nutrients that can be absorbed by the body.

Common Bile Duct

A tube that carries bile from the liver and gallbladder into the duodenum, the first part of the small intestine.