Authentic Exposure Company had the following transactions that took place during the year: I.Paid amount owing to suppliers $2,750.
II)Purchased new equipment for $5,000 by signing a long-term note payable.
III)Purchased a patent and paid $15,000 cash for the asset.
How what is the total effect of these transactions on free cash flow?
A)Increase
B)Decrease
C)No Effect
D)Cannot be determined

Question

Quizplus · Accepted Answer

The free cash flow decreases by $17,750 due to cash outflows: $2,750 paid to suppliers and $15,000 for the patent. The equipment purchase does not affect cash flow as it was financed through a note payable.

Authentic Exposure Company Had the Following Transactions That Took Place