Practice Quiz

CPA Accountant Review Questions

Category - Accounting

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Which of the following transactions have a negative impact on cash?
  1. A decrease in supplies on hand
  2. Proceeds from selling equipment used in the business
  3. A loss on selling equipment used in the business
  4. Dividends declared and paid
  5. An increase in income taxes payable
Explanation
Answer - D - Dividends declared and paid has a negative impact on cash. The other transactions all have a positive impact on cash.

Key Takeaway: A positive impact on cash cannot only be a source of cash, but an increase in cash or a positive amount on the statement of cash flows. A negative impact on cash cannot only be cash that is used, but a decrease in cash or a negative amount on the statement of cash flows.
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