Full Moon Productions Inc

question 98

Multiple Choice

Full Moon Productions Inc. has net cash flow from financing activities for the last year of $105 million. The company paid $15 million in dividends last year. During the year, the change in notes payable on the balance sheet was an increase of $40 million, and change in common and preferred stock was an increase of $50 million. The end of year balance for long-term debt was $50 million. What was their beginning of year balance for long-term debt?

• A) $5 million
• B) $20 million
• C) $30 million
• D) $35 million

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Definitions:

Quantity Equation

An equation that relates the quantity of money in an economy to the nominal value of transactions, used in economics to describe the relationship between money supply and price level.

Price Level

A measure of the average prices of goods and services in an economy at a specific time.

Money Supply

The aggregate of financial assets in an economy at a specific moment, which includes cash, coins, and the deposits in checking and savings accounts.

Quantity Equation

An equation that relates the quantity of money in an economy to the level of economic activity, typically framed as MV = PQ.