Warner Limited Classifies Interest Paid and Interest Received a Operating

question 7

Multiple Choice

Warner Limited classifies interest paid and interest received a operating activities. Warner Limited had the following cash flows during a reporting period:
Consideration paid to acquire a subsidiary, net of cash acquired $250 000
Dividends paid $65 000
Repayment of borrowings $90 000
Interest paid on borrowings $57 000
Proceeds from sale of plant $215 000
What is the amount of the cash flows in relation to financing activities of Warner Limited for the reporting period?

• A) Net cash inflow $155 000.
• B) Net cash outflow $155 000.
• C) Net cash inflow $212 000.
• D) Net cash outflow $212 000.

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Definitions:

Price-taker

An economic entity that does not have the market power to influence prices on its own and thus accepts the prevailing market price.

Price-searcher

A market participant who determines the price of goods or services based on the level of demand and supply, often in imperfectly competitive markets.

Selling Additional Units

Involves the process and strategies of increasing sales by offering more units of a product to the market.

Contestable Markets

Markets where the entry and exit of firms are so easy that the market always remains competitive, ensuring that prices remain close to marginal costs.