Change in the Cash Account: Indicate the impact of he following corporate action

Question

Change in the Cash Account: Indicate the impact of he following corporate actions on cash, using the letter I for an increase, D for a decrease, or N when no change occurs: a. A dividend is paid with funds received from a sale of debt. b. Real estate is purchased and paid for with short-term debt. c. Inventory is bought on credit. d. A short-term bank loan is repaid. e. Next year’s taxes are prepaid. f. Preferred stock is redeemed. g. Sales are made on credit. h. Interest on long-team debt is paid. i. Payments for previous sales are collected. j. The accounts payable balance is reduced. k. A dividend is paid. l. Production supplies are purchased and paid for with a short-term note. m. Utility bills are paid. n. Cash is paid for raw materials purchased for inventory. o. Marketable securities are sold.

Explanation / Answer

a. A dividend is paid with funds received from a sale of debt. N

b. Real estate is purchased and paid for with short-term debt. N

c. Inventory is bought on credit. N

d. A short-term bank loan is repaid. D

e. Next year’s taxes are prepaid. D

f. Preferred stock is redeemed. D

g. Sales are made on credit. N

h. Interest on long-team debt is paid. D

i. Payments for previous sales are collected. I

j. The accounts payable balance is reduced. D

k. A dividend is paid. D

l. Production supplies are purchased and paid for with a short-term note. N

m. Utility bills are paid. D

n. Cash is paid for raw materials purchased for inventory. D

o. Marketable securities are sold. I

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