During the Year,the Abbot Company Had the Following Changes in Account

question 30

Multiple Choice

During the year,the Abbot Company had the following changes in account balances:
1) 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.
2) 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.
3) The Accounts Receivable account had a beginning balance of $60,000 and an ending balance of $50,000.
4) 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 equipment for cash.
5) 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.
6) The amount of cash dividends declared and paid during the year was $22,000.
7) The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250.
What is the net cash flow from investing activities?

• A)$62,000 outflow
• B)$62,000 inflow
• C)$72,000 inflow
• D)$72,000 outflow

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Definitions:

Inventory Account

An account used to track the value of a company's inventory, including raw materials, work-in-progress, and finished goods.

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers.

Net Accounts Receivable

The total amount of money owed by customers for purchases made on credit, minus any provision for doubtful accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.