Which of the Following Would Cause an Inflow of Cash

question 60

Multiple Choice

Which of the following would cause an inflow of cash?

• A) Payment of a long-term debt
• B) Purchase of inventory for cash
• C) Sale of an asset for cash at less than its book value
• D) Issuing common stock in payment for legal services already provided

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Definitions:

Liquidity

The ease with which an asset can be converted into cash without significantly affecting its price.

Capital Investment Analysis

The process of assessing the profitability and risk of potential investment opportunities involving capital expenditures.

Depreciation

Allocating the value of a tangible asset over the period it is expected to be used, in a systematic manner.

Fixed Asset

A long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income, not expected to be consumed or converted into cash within a year.