During Year 2, Chico Company earned $1,950 of cash revenue, paid $1,600 of cash expenses, and paid a $150 cash dividend to its o

Question

3 years ago

14

During Year 2, Chico Company earned $1,950 of cash revenue, paid $1,600 of cash expenses, and paid a $150 cash dividend to its o

wners. Based on this information alone, which of the following is not correct?
A) Net income amounted to $350.
B) Total assets increased by $200.
C) Cash inflow from operating activities was $350.
D) Cash inflow from operating activities was $200.

Business

1 answer:

SCORPION-xisa [38] · Answer 1 · 2022-05-02T11:38:17+03:00

Answer:

B) Total assets increased by $200.

Explanation:

If during Year 2, Chico Company earned $1,950 of cash revenue, paid $1,600 of cash expenses, and paid a $150 cash dividend to its owners. Based on this information alone:

Then it is correct that there was a net income of $350 before the payment of dividend which is gotten by 1,950 - 1,600. Cash from operating activities will also be the same amount of $350.

However it will not be correct to state that assets increased by $200 as there is no such indication.