In Preparing a Company's Statement of Cash Flows for the Most

question 25

Multiple Choice

In preparing a company's statement of cash flows for the most recent year, the following information is available: $$\begin{array} { | l | r | } \hline \text { Loss on the sale of equipment } & \$ 14,00 0\\\hline \text { Purchase of equipment } & 225,000 \\\hline \text { Proceeds from the sale of equipment } & 106,00 \\\hline \text { Repayment of outstanding bonds } & 87,000 \\\hline \text { Purchase of treasury stock } & 25,000 \\\hline \text { Issuance of common stock } & 96,000 \\\hline \text { Purchase of land } & 115,00 \\\hline \text { Decrease in accounts receivable during the year } & 33,000 \\\hline \text { Payment of cash dividends } & 75,000 \\\hline\end{array}$$ Net cash flows from investing activities for the year were:

• A) $234,000 of net cash used.
• B) $120,000 of net cash provided.
• C) $340,000 of net cash used.
• D) $259,000 of net cash used.
• E) $280,000 of net cash provided.

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Definitions:

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, establishing market balance.

Equilibrium Quantity

The level of goods or services supplied matches the consumer demand at the price which establishes market equilibrium.

Preset Price

refers to a price that is established in advance and does not change in response to market conditions or negotiation.

Price Ceiling

A legal maximum price set by the government on certain goods and services to prevent prices from becoming too high.