AOS Industries Statement of Cash Flows for 2008 Operating Activities

question 25

Multiple Choice

AOS Industries Statement of Cash Flows for 2008 Operating activities
Net Income 3.2
Depreciation and amortization 1.4
Cash effect of changes in
Accounts receivable -2.1
Accounts payable 1.1
Inventory -0.8
Cash from operating activities 2.8
Investment activities
Capital expenditures -2.2
Acquisitions and other investing activity -0.4
Cash from investing activities -2.6
Financing activities
Dividends paid -1.5
Sale or purchase of stock 2.1
Increase in short-term borrowing 1.4
Increase in long-term borrowing 3.2
Cash from financing activities 5.2
Change in Cash and Cash Equivalents 5.4
Consider the above statement of cash flows. In 2008, AOS Industries had contemplated buying a new warehouse for $3 million, the cost of which would be depreciated over 10 years. If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of the 2008?

• A)It would have $3,000,000 less cash at the end of 2008.
• B)It would have $2,925,000 less cash at the end of 2008.
• C)It would have $1,500,000 less cash at the end of 2008.
• D)It would have an additional $7,500,000 in cash at the end of 2008.

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Definitions:

Significance Level

A statistical term representing the probability of rejecting the null hypothesis when it is true, often denoted by alpha.

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The manipulation of statistical data to achieve significant results, undermining the reliability of research findings.

Experimental Conditions

The controlled settings or environments in which experiments are conducted, allowing researchers to examine the effects of variables on subjects.

Unusual Responses

Behaviors or answers that deviate significantly from what is considered normal or expected in a given context.