Which of the Following Is a Use of Cash

question 232

Multiple Choice

Which of the following is a use of cash?

• A) Increase in the number of shares of stock outstanding.
• B) Reduction in long-term debt.
• C) Decrease in inventory.
• D) Decrease in net fixed assets.
• E) Increase in short-term notes payable.

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Definitions:

Taxable Income

The portion of income that is subject to income tax, after deductions and exemptions.

Permanent Differences

These are differences between taxable income and accounting income that will not reverse in future periods.

Interperiod Income Tax Allocation

The process of allocating income taxes over various accounting periods because of temporary differences that cause taxable income to differ from accounting income.

Deferred Tax

An accounting concept referring to a temporary difference between the tax expense shown in the income statement and the tax payable to the tax authorities, due to timing or methodological differences in recognizing revenue and expenses.