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Below Is an Example of an Incorrectly Prepared Statement of Cash

Question 2

Multiple Choice

Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct.
 Cash from operating activities  Net Income $60,000 Depreciation (4,000)  Increase in accounts receivable (2,000)  Increase in deferred tax liability (1,000) $53,000Cash from investing activitiesPurchase of marketable securities$(48,000) Dividends paid$(1,500) $(46,500) Cash from financing activitiesIncrease in Short-term debt$(500) Increase in Long-term debt(2,500) $(3,000) Increase in cash$3,500\begin{array}{l}\text { Cash from operating activities }\\\begin{array}{lr}\text { Net Income } & \$ 60,000 \\\text { Depreciation } & (4,000) \\\text { Increase in accounts receivable } & (2,000) \\\text { Increase in deferred tax liability } & (1,000) \\& \$ 53,000 \\\hline\text{Cash from investing activities}&\\\text{Purchase of marketable securities}&\$(48,000) \\\text{Dividends paid}&\$(1,500) \\& \$(46,500) \\\hline\text{Cash from financing activities}&\\\text{Increase in Short-term debt}&\$(500) \\\text{Increase in Long-term debt}&(2,500) \\&\$(3,000) \\\text{Increase in cash}&\$ 3,500 \\\end{array}\end{array}
-The correct Cash flows from investing activities is:


A) ($41,000)
B) ($45,500)
C) ($48,000)
D) none of the above

Correct Answer:

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