An increase in the days sales payable would indicate the company is
stretching out its payables, which would increase the cash from
operations.
Financial Reporting And Analysis MCQ - Financial Reporting And Analysis Section 1
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:
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:
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.
