The Following Information Should Be Used to According to the Provisions

question 57

Multiple Choice

The following information should be used to according to the provisions of GAAP (Statement of Cash flows) and using the following data. $$\begin{array} { l r } \text { Net income } & \$ 50,000 \\\text { Provision for bad debts } & 2,000 \\\text { Increase in inventory } & 1,000 \\\text { Increase in accounts payable } & 2,000 \\\text { Purchase of new equipment } & 15,000 \\\text { Sale of equipment for } \$ 10,000 \text { gain } & 20,000 \\\text { Depreciation expense } & 5,000 \\\text { Repurchase of common stock } & 10,000 \\\text { Payment of dividend } & 4,000 \\\text { Interest payment } & 3,000\end{array}$$
-What is net cash flow from investing?

• A)$10,000
• B)$5,000
• C)($5,000)
• D)($15,000)

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Definitions:

Corporate Tax Rate

The tax rate that companies are charged on their profits by the government.

Break-Even Lease Payment

The lease payment at which the cost of leasing equals the benefits received, with no net loss or gain from entering into the lease.

Cost of Debt

The effective rate that a company pays on its total debt, representing the interest expense on all outstanding debts.

Marginal Tax Rates

The rate of additional federal income tax that applies to each additional dollar of taxable income, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.