Dow Construction Company Reports a Net Use of Cash for Investing

question 73

Multiple Choice

Dow Construction Company reports a net use of cash for investing activities of $1.2 million and a net source of cash provided by financing of $.8 million. What was the effect on the cash balance?

• A) To cause the balance to increase by $.8 million.
• B) To cause the balance to decrease by $.4 million.
• C) To cause the balance to increase by $.4 million.
• D) Undeterminable because the beginning cash balance was not given.

---

Definitions:

Self-Employment Tax

A tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves, calculated on net earnings from self-employment.

Net Earnings

The amount of money left after all deductions, including taxes and operating expenses, have been subtracted from total income.

Standard Mileage Rate

A set rate per mile that taxpayers can use to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Vehicle Expenses

Costs incurred from the use of a vehicle for business purposes, including gas, repairs, and insurance, which may be deductible.