Packard Company Engaged in the Following Transactions During Year 1

question 16

Multiple Choice

Packard Company engaged in the following transactions during Year 1, its first year of operations: (Assume all transactions are cash transactions.) 1) Acquired $1,150 cash from the issue of common stock.2) Borrowed $620 from a bank.3) Earned $850 of revenues.4) Paid expenses of $290.5) Paid a $90 dividend.
During Year 2, Packard engaged in the following transactions: (Assume all transactions are cash transactions.)
1) Issued an additional $525 of common stock.2) Repaid $360 of its debt to the bank.3) Earned revenues of $950.4) Incurred expenses of $440.5) Paid dividends of $140.
What is Packard Company's net cash flow from financing activities for Year 2?

• A)$385 outflow
• B)$25 inflow
• C)$360 outflow
• D)$500 inflow

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Definitions:

Safety Margin

The difference between the actual level of performance or capacity and the minimum required level, serving as a buffer or contingency.

Labour-Intensive Firm

A company that requires a high level of labor input compared to capital investment in its operations.

Cost Volume Profit

An accounting technique used to analyze how changes in cost and volume affect a company's operating income and net income.

Cost Driver

A factor that incurs costs, as its presence or level of activity directly affects the total cost of an activity or product.