Calculate Cash Inflow or Outflow from Operating Activities Given the Following

question 27

Multiple Choice

Calculate cash inflow or outflow from operating activities given the following information: Net loss -$12,000; depreciation expense $3,000; increase in AR $1,250; decrease in inventory $900; increase in AP $760.

• A)Cash inflow of $9,675
• B)Cash inflow of $2,650
• C)Cash outflow of $8,590
• D)Cash outflow of $1,690

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Definitions:

Price Floor

A government- or authority-imposed minimum price for a commodity, which is meant to ensure that the market price does not drop below a certain level.

Equilibrium Price

The price at which the quantity of a good or service supplied equals the quantity demanded, leading to market stability where there is no tendency for change.

Excess Supply

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Nonprice Rationing

The allocation of goods among consumers using criteria other than price, such as waiting times or quotas.