Which of the Following Would Cause an Inflow of Cash

question 50

Multiple Choice

Which of the following would cause an inflow of cash?

• A)issuing common shares to retire long-term debt
• B)payment of a dividend to the shareholders
• C)incurring a loss on the sale of a capital asset
• D)recognizing depreciation expense

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Definitions:

Common-Base Year Value

An accounting method used to compare financial statements of different years by translating figures into values relative to a single base year.

Accounts Receivable

Outstanding dues from customers for goods or services a company has already delivered.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Cash Ratio

A liquidity metric that measures a company's ability to pay off its short-term liabilities with its cash and cash equivalents.