Question

During Year 2, Chico Company earned $3,050 of cash revenue, pald $1,300 of cash expenses, and paid a $800 cash dividend to its owners. Based on this information alone, which of the following statements is not true? Multiple Choice Net Income amounted to $1,750 Total assets increased by $950 Cash Inflow from operating activities was $1,750 Cash outflow from financing activities was $950

Answer 1

Answer

Correct option - Cash outflow from financing activities was $950.

Explanation -

Option 1

Revenue = $3,050

Expenses = $1,300

Hence, Net Income = Income - Expenses

= ($3,050 - $1,300)

  = $1,750

So the statement is true.

Option 2

Cash received = $3,050

Cash expense = $1,300

Cash dividend = $800

Net increase in cash = ($3,050 - $1,300 - $800)

= $950

As cash is an asset, there is an increase in total assets by $950.

Hence, the statement is true.

Option 3

Cash revenue from operating activities = $3,050

Cash expense from operating activities = $1,300

Net cash inflow from operating activities = (Cash inflow - Cash outflow)

  = $1,750

Hence, the statement is true.

Option 4

Dividend of $800 paid in cash is the only financial activity in the given information.

so, the outflow from financial activities is $800 and not $950.

Hence, the given statement is not true.