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7 February, 16:04

A firm purchases goods on credit worth $150. The same firm pays off $100 in old credit purchases. An investment is made via the purchase of a new facility, and equity is issued in the amount of $300 to pay for the purchase. What is the change in net cash provided by operations? A. $50 increaseB. $100 increaseC. $150 increaseD. $250 increase

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  1. 7 February, 16:56
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    A. $50 increase

    Explanation:

    Basically there are three types of activities:

    1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

    2. Investing activities: It records those activities which include purchase and sale of the fixed assets

    3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.

    The change in net cash provided by operation is shown below:

    = Investment made - purchased goods on credit - paid amount

    = $300 - $150 - $100

    = $50
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