Consider the following balance sheet: Cash $70,000 Accounts receivable $30,000 Inventories $50,000 Net fixed assets $350,000 Total assets $500,000 Accounts payable $30,000 Long-term debt $20,000 Common stock $200,000 Retained earnings $250,000 Total liabilities and equity $500,000 Assume that the business uses $30,000 of its cash to pay salaries. Which of the following statements reflects the resulting balance sheet change

Consider the following balance sheet: Cash $70,000 Accounts receivable $30,000 Inventories $50,000 Net fixed assets $350,000 Total assets $500,000 Accounts payable $30,000 Long-term debt $20,000 Common stock $200,000 Retained earnings $250,000 Total liabilities and equity $500,000 Assume that the business uses $30,000 of its cash to pay salaries. Which of the following statements reflects the resulting balance sheet change

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 34P

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Concept explainers

Cash Outflow

The term "cash flow" basically means the flow of money in and out of business. The cash flow usually takes place from operational, investing, and financing activities. The cash flow normally denotes the amount of cash that is transferred either into the business as positive cash flows or out of business as expenses with regards to operating, investing, and financing activities.

Question

Consider the following balance sheet: Cash $70,000

Accounts receivable $30,000

Inventories $50,000

Net fixed assets $350,000

Total assets $500,000

Accounts payable $30,000

Long-term debt $20,000

Common stock $200,000

Retained earnings $250,000

Total liabilities and equity $500,000

Assume that the business uses $30,000 of its cash to pay salaries. Which of the following statements reflects the resulting balance sheet change?

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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