Ask Experts Questions for FREE Help !
Ask
    maria1588's Avatar
    maria1588 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Apr 15, 2014, 09:42 AM
    Which of the following is a cash outflow?
    Which of the following is a cash outflow?
    a. a new issue of bonds
    b. a decrease in accounts receivable
    c. an increase in plant
    d. an increase in accounts payable
    talaniman's Avatar
    talaniman Posts: 54,327, Reputation: 10855
    Expert
    		  
    #2

    Apr 15, 2014, 09:46 AM
    What conclusion did you come up with from your own research?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #3

    Apr 16, 2014, 01:12 AM
    Cash outflow means increase in asset or decrease in liabilities. Now study each of the options and decide which of them is an outflow.

    a. a new issue of bonds - increases cash
    b. a decrease in accounts receivable - increases cash
    c. an increase in plant- decreases cash
    d. an increase in accounts payable- increases cash
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #4

    Apr 16, 2014, 08:46 AM
    Quote Originally Posted by rehmanvohra View Post
    Cash outflow means increase in asset or decrease in liabilities.
    Not true. If cash flows out, it means you have less of it after the fact, but it may or may not change the total amount of either assets or liabilities. For example, if you buy raw materials with cash your net assets are unchanged, since you've swapped cash assets for a phsyical assets.

    Quote Originally Posted by rehmanvohra View Post
    Now study each of the options and decide which of them is an outflow.
    a. a new issue of bonds - increases cash
    b. a decrease in accounts receivable - increases cash
    c. an increase in plant- decreases cash
    d. an increase in accounts payable- increases cash
    This is confusing. Your terminology "increases cash" means the amount of cash the company has on hand is increased, which is the opposite of what the question asked. Also item d does not involve cash flow - not paying a bill neither increases nor decreases cash.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #5

    Apr 17, 2014, 02:11 AM
    Quote Originally Posted by ebaines View Post
    Not true. If cash flows out, it means you have less of it after the fact, but it may or may not change the total amount of either assets or liabilities. For example, if you buy raw materials with cash your net assets are unchanged, since you've swapped cash assets for a phsyical assets.



    This is confusing. Your terminology "increases cash" means the amount of cash the company has on hand is increased, which is the opposite of what the question asked. Also item d does not involve cash flow - not paying a bill neither increases nor decreases cash.
    Please refer to the following link. It might help clearing confusion.

    http://www.accounting4management.com...cash_flows.htm
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
    		  
    #6

    Apr 17, 2014, 05:54 AM
    I stand corrected - d does indeed cause a change in cash flow.
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
    		  
    #7

    Apr 17, 2014, 05:56 AM
    Quote Originally Posted by ebaines View Post
    I stand corrected - d does indeed cause a change in cash flow.
    Thanks. I am pleased to be of help.
    talaniman's Avatar
    talaniman Posts: 54,327, Reputation: 10855
    Expert
    		  
    #8

    Apr 17, 2014, 06:00 AM
    So you have solved your homework question.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Cash inflow and outflow [ 3 Answers ]

Capital Budgeting and Cash Flow Estimation After seeing Snapple’s success with noncola soft drinks and learning of Coke’s and Pepsi’s interest, Allied Food Products has decided to consider an expansion of its own in the fruit juice business. The product being considered is fresh lemon juice....

When we use the shower or washer water comes in from the outflow pipe. [ 1 Answers ]

It has been below freezing for a couple of weeks now and at first we had water coming into the basement from the outflow pipe once in a while. Now if you use the shower or washer it comes in through the pipe.

Washer Outflow Spilling Out [ 3 Answers ]

Hi. I just moved into a duplex and have had a washing machine installed. The outflow hose has to curl up and then go into a pipe that is only about a foot long, if that, before the pipe turns into a U. When the water discharges, it comes out of the pipe. Would adding some length to the pipe...

View more questions Search