Financial Reporting And Analysis - Financial Reporting And Analysis Section 1
81. A company’s operating cash flow will most likely increase with an increase in:
- Option : A
- Explanation : An increase in the days sales payable would indicate the company is stretching out its payables, which would increase the cash from operations.
83. Selected data of a company’s operations is presented below:
| Net Income | $150,000 |
| Increase in Accounts receivable | $20,000 |
| Increase in Accounts payable | $12,000 |
| Depreciation and amortization | $5,000 |
The cash flow from operations is closest to:
84. Which of the following least likely represents a financing activity?
- Option : C
- Explanation : Options A and B represent financing activities. Option C is an operating activity.
85. MNC Corporation recorded the following events in 2011:
| Purchase of securities for trading purposes | $480,000 |
| Proceeds from the sale of trading securities | 600,000 |
| Proceeds from issuance of bonds | 1,000,000 |
| Purchase of 30% of the shares of an affiliated company | 550,000 |
On the 2012 statement of cash flows, MNC’s net cash flow from investing activities is closest to:
- Option : B
- Explanation : Cash flows for the purchase of the shares in an affiliated company are cash from investing activities, therefore the net amount is -$550,000. Proceeds from issuance of bonds are financing activities. Cash flows from trading securities are operating activities.
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