Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold in the last three months of 2015 and the first month of 2016 is: Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 per cent of next month's sales.
-Which of the following is a use of cash?
A) taxes paid
B) depreciation
C) net increase in shareholders' equity
D) cash receipts from customers

Question

Use the information below to answer the following questions.
Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold in the last three months of 2015 and the first month of 2016 is:  Finished goods inventory at the end of September is 2,000 units. Finished goods inventory is set at 20 per cent of next month's sales.
-Which of the following is a use of cash?
A) taxes paid 
B) depreciation 
C) net increase in shareholders' equity 
D) cash receipts from customers

Quizplus · Accepted Answer

Taxes paid require the use of cash, whereas depreciation and net increase in shareholders' equity do not involve the use of cash. Cash receipts from customers would actually be an increase in cash, not a use.

Use the Information Below to Answer the Following Questions