How Would a $5,000 Increase in AR and a $2,000

question 377

Multiple Choice

How would a $5,000 increase in AR and a $2,000 decrease in inventory affect cash?

• A) $5,000 source; $2,000 use
• B) $2,000 source; $5,000 use
• C) $5,000 source; $2,000 source
• D) $3,000 source
• E) $7,000 source

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Definitions:

Retained Earnings

Profits that a company has kept or retained rather than distributing to shareholders as dividends.

Common Stock Dividends Distributable

An amount that has been declared by a corporation to be distributed to its common stockholders as dividends but has not yet been paid.

Paid-in Capital

The amount of money raised by a company through the issuance of securities to investors, reflecting the capital provided by shareholders in exchange for stock.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.