Mark all of the following USES of cash, i.e. when a business experiences cash out flow.
1. | Increase in Accounts Receivable | |
2. | Sale of PP&E | |
3. | Purchase of subsidiary business | |
4. | Decrease in Accounts payable | |
5. | Decrease in Prepaid Expenses | |
6. | Issuance of Long-Term Debt | |
7. | Increase in Cash net income | |
8. | Purchase of PP&E | |
9. | Increase in Deferred taxes | |
10. | Repayment of Long-Term Debt |
Expert Answer
Increase in Accounts Receivable – a business does not experience cash out flow. It is an indication of increase in revenues but cash not yet received.
Sale of PP&E – a business experience cash in flow.
Purchase of subsidiary business – a business experiences cash out flow.
Decrease in Accounts payable – a business experiences cash out flow as payments have been made to creditors.
Decrease in Prepaid Expenses – a business does not experience cash out flow. It is an indication of expiration of some prepaid expenses.
Issuance of Long-Term Debt – a business experiences cash out flow as it has provided loan.
Increase in Cash net income – a business does not experience cash out flow.
Purchase of PP&E- a business experiences cash out flow.
Increase in Deferred taxes – a business does not experience cash out flow.
Repayment of Long-Term Debt – a business experiences cash out flow.