Which of the Following Is Incorrect Regarding the Financing Activities

question 6

Multiple Choice

Which of the following is incorrect regarding the financing activities section of a statement of cash flows?

• A) Increases in contributed capital accounts suggest cash inflows occurred from issuing equity instruments.
• B) Decreases in long-term debt accounts balances suggest cash outflows occurred for payment of debt.
• C) Increases in short-term notes payablenotes payable accounts suggest cash outflows occurred from issuing notes or bonds.
• D) Decreases in retained earningsretained earnings suggest cash outflows occurred to pay dividends.

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Definitions:

Notes Receivable

A claim or right to receive a determinable sum of money from another party as evidenced by a promissory note.

Interest

The cost of borrowing money or the return on invested funds, generally expressed as a percentage rate over a period of time.

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to actually collect, reflecting potential losses.

Gross Amount

The total of all amounts before any deductions are made, such as taxes or discounts.