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:

Operating Cycle

The duration between a company's purchase of inventory and the receipt of cash from accounts receivable.

Accounts Receivable Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services provided.

Inventory Period

The average time that inventory is held before it is sold or used in production.

Operating Cycle

Refers to the duration it takes for a company to buy goods or services, convert them into products, sell those products, and collect cash from the sales.