scarecrow

Schweser Test 2PM: Question 96:

Employer Contributions = 5,000
Econ. Pension Expense = 4,250

Ignoring Taxes, which adjustment best describes the adjustments neccessary on the Cash Flow Statement?

a) Increase Operating Cash Flow 750, decrease Financning Cash Flow 750
b) Increase Operating Cash Flow 2084, decrease Financning Cash Flow 2084
c) Increase Operating Cash Flow 5000, decrease Financning Cash Flow 5000

Employer contributed 5000, Eco. pension expense=4250

So 750 $ more has been contributed by Employer - this is paying off loan on the Liability balance accumulated thus far.
so A)

When you pay off a loan - it is a CFF outflow. So CFF goes down.
If CFF goes down - CFO has to go up to balance.

CP