1) Net cash from operations increaed, yet cash as reported on the balance shee d

Question

1) Net cash from operations increaed, yet cash as reported on the balance shee decresed. Which of the following factors could explain this situation?

A) the comoany cut its dividend

B)the company iaaued new long term debt

C) The company made large investments in fixed assets

d) Non-of the above

2)

INC. has a current ratio equal to 1.4 which of the following tansaction will increase the cpmay current ratio

a) the company collects 500,000$ in chsh of its accounts recevable

b) the compnay pays back 50000 of its long term debt

c) the company writes a 30000 check to pay off some exsisting A/P

d) The company sells 1$ million of inventroy on credit

Explanation / Answer

Cash balance in balance sheet comprises of cash balances from all investing, operating and financing activities. Here, operating cash flows were positive but investing cash flows are large negative. So cash reported in balance sheet was decreased.

Hence, correct option is (C).

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