Lexington Company Engaged in the Following Transactions During Year 1

question 13

Multiple Choice

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) Acquired $5,000 cash from issuing common stock.Borrowed $3,200 from a bank.Earned $4,100 of revenues.Incurred $2,600 in expenses.Paid dividends of $600.
Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.)
Acquired an additional $1,500 cash from the issue of common stock.Repaid $2,000 of its debt to the bank.Earned revenues, $5,500.Incurred expenses of $3,150.Paid dividends of $1,840.
What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?

• A)$2,340 outflow
• B)$2,340 inflow
• C)$1,500 inflow
• D)$1,500 outflow

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Definitions:

Quantity of Labor

The total hours of work or number of workers employed by a firm or within an economy, which can influence production output levels.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive items.

Labor Supply Curve

A graphical representation showing the relationship between the number of hours workers are willing to work and the wage rate, typically illustrating that as wages increase, workers will supply more labor hours.

Preferences and Social Norms

The combination of individual desires and the influence of societal expectations on consumer behavior.