The amount of cash on a company''s balance sheet

Reference no: EM13320178

Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Explain and state the assumptions that underlie your answer.

It issues $9 million of new common stock.
It buys new plant and equipment at a cost of $3 million.
It reports a large loss for the year.
It increases the dividends paid on its common stock.

1.Statements (b) and (d) will increase the amount of cash on a company's balance sheet. Statement (a) will decrease cash through the sale of common stock. Selling stock provides cash through financing activities. On one hand, Statement (c) would decrease cash; however, it is also possible that Statement (c) would increase cash, if the firm receives a tax refund for taxes paid in a prior year.
2.Statements (b) and (d) will increase the amount of cash on a company's balance sheet. Statement (a) will increase cash through the sale of common stock. Selling stock provides cash through financing activities. On one hand, Statement (c) would decrease cash; however, it is also possible that Statement (c) would increase cash, if the firm receives a tax refund for taxes paid in a prior year.
3.Statements (b) and (d) will decrease the amount of cash on a company's balance sheet. Statement (a) will increase cash through the sale of common stock. Selling stock provides cash through financing activities. On one hand, Statement (c) would decrease cash; however, it is also possible that Statement (c) would increase cash, if the firm receives a tax refund for taxes paid in a prior year.
4.Statements (b) and (d) will decrease the amount of cash on a company's balance sheet. Statement (a) will decrease cash through the sale of common stock. Selling stock provides cash through financing activities. On one hand, Statement (c) would decrease cash; however, it is also possible that Statement (c) would increase cash, if the firm receives a tax refund for taxes paid in a prior year.
5.Statements (b) and (d) will decrease the amount of cash on a company's balance sheet. Statement (a) will increase cash through the sale of common stock. Selling stock provides cash through financing activities. Statement (c) would neither increase or decrease cash for taxes paid in a prior year.

Reference no: EM13320178

Questions Cloud

To access the standard deduction table : Morgan (age 45) is single and provides more than 50% of the support of Rosalyn (a family friend), Flo (a niece, age 18), and Jerold (a nephew, age 18).

Calculate the net rate at which the sphere radiates energy : A sphere that is a perfect blackbody radiator has a radius of 0.100 m, Calculate the net rate at which the sphere radiates energy

Explain the current liabilities : Management of Rivers Co. anticipates that its year-end balance sheet will show current assets of $12,801 and current liabilities of $7,420. Management is considering paying $3,830 of accounts payable before year-end even though payment isn't due u..

Explain what is the work function of the metal : When a piece of metal is irradiated with UV radiation (lambda = 162 nm), electrons are ejected with a kinetic energy of 5.46 x 10^-19 J. What is the work function of the metal

The amount of cash on a company''s balance sheet : Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Explain and state the assumptions that underlie your answer.

Essentials of advanced financial accounting : In the "Essentials of Advanced Financial Accounting" Solutions, what do those like "1EXAAN" mean. Which question does it represent?

What is the acceleration of the lighter block : A 1.4Kg block and a 2.6kg block are attached to opposite ends of a light rope. what is the acceleration of the lighter block

Determine the specific heat of the unknown substance : An unknown substance has a mass of 0.125 kg and an initial temperature of 94.7. calculate the specific heat of the unknown substance

What is the replacement of equipment : Columbia Enterprises is studying the replacement of some equipment that originally cost $74,000. The equipment is expected to provide six more years of service if $8,700 of major repairs are performed in two years.

User Account

All Pages