Last year Roussakis Company's operations provided a negative net cash flow, yet the cash shown on its balance sheet increased. Which of the following statements could explain the increase in cash, assuming the company's financial statements were prepared under generally accepted accounting principles?

Question

Quizplus · Accepted Answer

Selling fixed assets would result in a decrease in the asset account on the balance sheet and an increase in cash. This increase in cash could offset the negative net cash flow from operations, resulting in an overall increase in cash on the balance sheet. Repurchasing common stock or retiring long-term debt would not directly impact cash, and high depreciation expenses would decrease net income but would not impact the balance sheet's cash balance.

Last Year Roussakis Company's Operations Provided a Negative Net Cash