Drexon Corp., which follows U.S. GAAP, uses the direct method to report its cash flows. The CFO is assessing the impact on cash flows of 4 events during the fiscal year. Specify which category each event falls under (under the direct method) and note whether it increases cash, decreases cash, or has no impact on cash. (1) 40,000 new shares of stock are issued near the close of the fiscal year. (2) Drexon purchases 60% of a subsidiary company. (3) Accounts receivable decreases from $620,000 to $610,000. (4) Dividends of $12,000 are paid on Drexon company stock.
Drexon Corp., which follows U.S. GAAP, uses the direct method to report its cash flows. The CFO is assessing the impact on cash flows of 4 events during the fiscal year. Specify which category each event falls under (under the direct method) and note whether it increases cash, decreases cash, or has no impact on cash. (1) 40,000 new shares of stock are issued near the close of the fiscal year. (2) Drexon purchases 60% of a subsidiary company. (3) Accounts receivable decreases from $620,000 to $610,000. (4) Dividends of $12,000 are paid on Drexon company stock.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Drexon Corp., which follows U.S. GAAP, uses the direct method to report its cash flows. The
CFO is assessing the impact on cash flows of 4 events during the fiscal year. Specify which
category each event falls under (under the direct method) and note whether it increases
cash, decreases cash, or has no impact on cash.
(1) 40,000 new shares of stock are issued near the close of the fiscal year.
(2) Drexon purchases 60% of a subsidiary company.
(3) Accounts receivable decreases from $620,000 to $610,000.
(4) Dividends of $12,000 are paid on Drexon company stock.
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