During 2014the Year,the Abbot Company Had the Following Changes in Account

question 31

Multiple Choice

During 2014the year,the Abbot Company had the following changes in account balances: 1) The accumulated depreciation accountAccumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000.The increase was due to depreciation expense.
2) The long-term notes payableNotes Payable account had a beginning balance of $40,000 and an ending balance of $15,000.The decrease was due to repayment of debt.
3) The accounts receivableAccounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.
4) The equipmentEquipment account had a beginning balance of $25,000 and an ending balance of $92,500.The increase was due to the purchase of equipment for cash.
5) The long term investments account (marketable securities) had a beginning balance of $18,000 and an ending balance of $12,500.The decrease was due to the sale of investments at cost.
6) The amount of cash dividends declared and paid during the year was $22,000.
7) The interest payable account had a beginning balance of $2,250 and an ending balance of $1,250.
What is the net cash flow from financing activities?

• A) $22,000 inflow
• B) $25,000 inflow
• C) $25,000 outflow
• D) $47,000 outflow

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Definitions:

Gross Profit

The difference between sales and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

FIFO Inventory

Stands for "First-In, First-Out", an inventory valuation method where the oldest inventory items are recorded as sold first.

Perpetual Inventory System

This inventory accounting technique instantly logs the acquisition or sale of inventory by utilizing computerized point-of-sale systems along with enterprise asset management software.

LIFO Inventory

An inventory valuation method (Last In, First Out) where the most recently produced or acquired items are recorded as sold first.