Lexington Company Engaged in the Following Transactions During Year 1

question 173

Multiple Choice

Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800. Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.) Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280.
What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?

• A)$2,880 outflow
• B)$2,880 inflow
• C)$1,000 outflow
• D)$1,000 inflow

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Definitions:

Pre-Tax-And Transfer Income

The total income of individuals or households before taxes are deducted and before any government transfers, such as subsidies or welfare, are added.

Trend

A general direction in which something is developing or changing over time.

Percentage Terms

Percentage terms refer to expressions or calculations presented as a fraction of 100, indicating a portion or ratio in relation to a whole.

Bottom 40%

Refers to the lower 40 percent of the income distribution, often used in discussions of income inequality.