Lopez Corp

question 143

Multiple Choice

Lopez Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: 1) Long-Term Notes Payable, beginning balance, $80,000
2) Long-Term Notes Payable, ending balance, $76,000
3) Common Stock, beginning balance, $3,000
4) Common Stock, ending balance, $26,000
5) Retained Earnings, beginning balance, $75,000
6) Retained Earnings, ending balance, $115,000
7) Treasury Stock, beginning balance, $6,000
8) Treasury Stock, ending balance, $10,000
9) No stock was retired.
10) No treasury stock was sold.
11) During 2014, the company repaid $36,000 of Long-Term Notes Payable.
12) During 2014, the company borrowed $32,000 on a new Note Payable.
13) Net income for the year was $49,000.
"14) Assume all dividends declared during the year were paid.
How much was the net cash flow from financing activities?"

• A)$2,000
• B)$10,000
• C)$(6,000)
• D)$6,000

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Definitions:

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, and other assets.

Vicarious Liability

A legal doctrine holding an individual or entity liable for the actions of another, based on the relationship between them, such as employer-employee.

Ultra Vires Rule

A legal doctrine that acts performed beyond the scope of a corporation's or entity's powers are invalid.

Business Judgment Rule

A legal principle that protects the decisions made by a corporation's board of directors from being challenged in court, provided they were made in good faith and with reasonable care.