Chow Company Earned $1,500 of Cash Revenue, Paid $1,200 for Cash

question 50

Multiple Choice

Chow Company earned $1,500 of cash revenue, paid $1,200 for cash expenses, and paid a $200 cash dividend to its stockholders. Which of the following statements is true?

• A) The net cash inflow from operating activities was $100.
• B) The net cash outflow for investing activities was $200.
• C) The net cash inflow from operating activities was $300.
• D) The net cash outflow for investing activities was $100.

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Definitions:

Inventory

Inventory refers to the goods and materials that a business holds for the ultimate purpose of resale or production.

Continuing Franchise Fees

Regular payments made by franchisees to the franchisor for ongoing support and the right to continue operating under the franchisor's brand and system.

Franchise Agreement

A legal, binding contract between a franchisor and franchisee, outlining the terms and conditions for running a franchised business.

Cost Recovery Method

A revenue recognition method where no profit is recognized until the costs of the sold goods or services are fully recovered.