Question

A positive ___ represents an internal source of funding.

	1) Share capital account
	2) Cash flow
	3) Retained earnings
	4) Dividends account Which of the following is not a typical operating activity? 1) payment of long-term notes payable 2) payment of accounts payable 3) collection of accounts receivable 4) payment of wages

Answer 1

Question 1

Option 3: Retained earnings

Explanation:

1. Share capital account is incorrect because it the fund already contributed by the shareholders or stockholders of the company. It is the fund already in use Therefore, it does not represent an internal source of funding.

2. Cash flow is incorrect because cash flow means the total amount of money transferred in and out of a business. A positive Cash flow never represents internal source of fund.

3. Dividend account is the correct answer because it is the money that is plough backed or retained by the company for the future financial needs like funding an expansion, paying dividends to shareholders, mergers and acquisition etc. Therefore, some positive retained earnings represent an internal source of funding.

4. Dividend account is incorrect because it is a temporary stockholders' equity account that is debited for the amount of the dividends that a corporation declares on its capital stock. it does not represent an internal source of funding.

Question 2

Option 1: payment of long-term notes payable

Explanation:

1. option 1 is correct because it is a financing activity. Payment on non-current liabilities will be included in financing activities in the cash flow statement.

2. option 2 is incorrect because it is a operating activity.

3. option 3 is incorrect because it is a operating activity.

4. option 4 is incorrect because it is a operating activity.