Follow Us :

Financial Reporting and Analysis Q138

0. Lincoln Ltd issued a $20,000 200-day note at 10%, and used the cash to pay for salaries. It also issued long-term debt worth $90,000 at 10% annually and used the cash to purchase equipment for the new office. The combined effect of these transactions is least likely to be:

  • Option : C
  • Explanation : The only investing activity is the purchase of equipment; thus investing activity should increase by $90,000. Financing activity comprises of both short term and long term debt and thus increases by $110,000. Salaries paid is an operating activity, which decreases operating cash flows by $20,000.
Cancel reply

Your email address will not be published. Required fields are marked *


Cancel reply

Your email address will not be published. Required fields are marked *