In Preparing a Company's Statement of Cash Flows for the Year

question 158

Multiple Choice

In preparing a company's statement of cash flows for the year just ended, the following information is available: $\begin{array} { l r } \text { Loss on the sale of equipment } & \$ 14,000 \\\hline \text { Purchase of equipment } & 225,000 \\\hline \text { Proceeds from the sale of equipment } & 106,000 \\\hline \text { Repayment of outstanding bonds } & 87,000 \\\hline \text { Purchase of treasury stock } & 25,000 \\\hline \text { Issuance of common stock } & 96,000 \\\hline \text { Purchase of land } & 115,000 \\\hline \text { Increase in accounts receivable during the year } & 33,000 \\\hline \text { Decrease in accounts payable during the year } & 75,000 \\\hline \text { Payment of cash dividends } & 35,000\end{array}$
-
Net cash flows from financing activities for the year were:

• A) $347,000 of net cash used.
• B) $26,000 of net cash used.
• C) $51,000 of net cash used.
• D) $147,000 of net cash used.
• E) $340,000 of net cash used.

---

Definitions:

Implicit Costs

Costs that represent foregone opportunities, such as the income a business owner forgoes by investing in their own company instead of elsewhere.

Explicit Costs

Directly incurred expenses in the operation of a business, such as wages, rent, and material costs, which are clearly accounted for and easy to identify.

Opportunity Costs

The potential benefits missed out on when choosing one alternative over another.

Explicit Costs

Direct, out-of-pocket payments for goods or services that are made by a business as part of its operations.