[The Following Information Applies to the Questions Displayed Below

question 10

Multiple Choice

[The following information applies to the questions displayed below.]

During Year 1, El Paso Company had the following changes in account balances:

The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense.
The Long-Term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt.
The Equipment Account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of other operational assets.
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.
The Dividends Payable account had a beginning balance of $12,000 and an ending balance of $10,000. There were $20,000 of dividends declared during the period.
The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250. The difference was due to the payment of interest.

-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:

Production Volume

The total number of units of a product or service produced over a specific period.

Sales Volume

The total number of units of product sold during a specific period.

Variable Costing

A costing method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a product.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries of permanent staff, and equipment depreciation.