The Statement of Cash Flows for Georgey Company for 2004

question 21

Multiple Choice

The statement of cash flows for Georgey Company for 2004 and 2005 is as follows:
$$\begin{array} { | l | c | c | } \hline & \mathbf { 2 0 0 4 } & \mathbf { 2 0 0 5 } \\\hline \text { Net income } & \$ 189 & \$ 170 \\\hline \begin{array} { l } \text { Adjustments to reconcile net } \\\text { income to net cash provided by } \\\text { operating activities: }\end{array} & & \\\hline \text { Depreciation and amortization } & 201 & 173 \\\hline \text { Deferred income taxes } & 14 & ( 20 ) \\\hline \text { Restructuring charges } & 80 & 90 \\\hline \text { Accounts receivable } & 30 & 20 \\\hline \text { Inventory } & ( 30 ) & 50 \\\hline \text { Current liabilities } & 10 & 30 \\\hline \text { Cash flow from operations } & 494 & 513 \\\hline & & \\ \text { Sale of equipment } & 200 & 300 \\\hline \text { Purchase of equipment } & ( 130 ) & ( 120 ) \\\hline \text { Cash flow from investing } & 70 & 180 \\\hline & & \\ \text { Dividends } & ( 120 ) & ( 130 ) \\\hline \text { Long-term debt } & ( 440 ) & ( 440 ) \\\hline \text { Cash flow from financing } & ( 560 ) & ( 570 ) \\\hline\end{array}$$
-Which of the following statements is correct?

• A) Restructuring is a major source of cash for Georgey
• B) Accounts receivable increased in 2005
• C) Depreciation is a major source of cash for Georgey
• D) Major use of cash resulted in decreased leverage

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Definitions:

Plasma Membrane

The plasma membrane is a biological barrier that divides a cell's inside from its external surroundings, regulating the entry and exit of materials.

Stem Epidermis

The outermost layer of cells covering the stem of a plant, protecting it and contributing to water and gas exchange.

Parenchyma

A type of simple, living and frequently photosynthetic plant tissue that makes up the bulk of most non-woody structures.

Life Cycle

The series of changes in the life of an organism, including reproduction, growth, and eventually death.