Calculate Cash Inflow or Outflow from Operating Activities Given the Following

question 96

Multiple Choice

Calculate cash inflow or outflow from operating activities given the following information: profit before tax $11,250; depreciation expense $1,250; interest paid $725; tax paid $1,050; decrease in AR $125; increase in inventory $900; decrease in AP $700.

• A)Inflow of $10,375
• B)Inflow of $8,850
• C)Outflow of $14,650
• D)Outflow of $6,150

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Definitions:

Security Interest

A legal claim on assets which are pledged as collateral to secure a debt, giving the lender rights to the property if the debtor defaults.

Corporation Bankrupt

A situation where a company legally declares its inability to pay its debts, leading to legal proceedings that might involve reorganization or liquidation to settle the outstanding liabilities.

Debtor Bankrupt

A status indicating an individual or entity is legally declared unable to repay their debts to creditors.

Superintendent of Bankruptcy

A government official responsible for overseeing and administering bankruptcy cases and proceedings.