Question

In: Accounting

Indicate whether each of the following is a source of cash or use of cash Depreciation...

Indicate whether each of the following is a source of cash or use of cash

  1. Depreciation expense

  2. The sale of production equipment at the end of its useful life

  3. Dividends paid to shareholders

  4. An increase in account payable

  5. An increase in inventory

  6. The sale of securities held for investment

  7. The repayment of borrowed capital

  8. The amortization of intangibles

  9. An increase in the Deferred Taxes account

Solutions

Expert Solution

Depreciation expense Neither a source of cash Nor a use of cash

The sale of production equipment at the end of its useful life
Source of Cash
Dividend paid to shareholders Use of Cash
Increase in Accounts Payable Source of Cash
Increase in Inventory Use of Cash
Sale of securities held for Investment Source of Cash
Repayment of borrowed capital Use of Cash
Amortization of Intangibles Neither a source of cash Nor a use of cash
Increase in Deferred tax account(Note) Source of Cash/Use of cash
Note:
If there is an increase in Deferred tax liability or decrease in Deferred tax assets then it can be called as Source of cash
If there is an decrease in Deferred tax liability or increase in Deferred tax assets then it can be called as use of cash

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