27．Assume U.S. GAAP (generally accepted accounting principles) applies unless otherwise noted.

On 31 December 2002, a company issued a $20,000, 90-day note at 8 percent to pay for inventory purchased that day and issued $130,000 of long-term debt at 11 percent annually to pay for new equipment purchased that day. Using the indirect method, which of the following most accurately reflects the combined effect of both transactions on the company's statement of cash flows for the year ended 31 December 2002? Cash flow from:

Select exactly 1 answers from the following:
A. operations increases $20,000.
B. financing increases $130,000.
C. operations decreases $20,000.
D. financing decreases $130,000.
答案和详解如下！
Feedback: Correct answer: C

The Analysis and Use of Financial Statements, 3rd edition, Gerald I. White, Ashwinpaul C. Sondhi, and Dov Fried (Wiley, 2003), pp. 78?2

2006 Modular Level I, Vol. II, pp. 587-592

Study Session 7-33-b

compute interpret a statement of cash flows, using direct method and the indirect method

The increase in inventory would decrease cash flow from operations by $20,000; the combined amount of short-term and long-term borrowing ($150,000) would be included in cash flow from financing activities.