Jessie's Bobcat Rentals' operations provided a negative net cash flow last year, 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

The increase in cash could be due to the sale of fixed assets, which would result in a cash inflow and an increase in cash on the balance sheet. Despite the negative net cash flow from operations, the increase in cash from the sale of fixed assets could have offset the negative cash flow. The other options are not likely to result in an increase in cash. High depreciation expenses would decrease net income but would not affect cash. Repurchasing common stock would result in a cash outflow, as would retiring long-term debt. Increasing capital expenditures would also result in a cash outflow.

Jessie's Bobcat Rentals' Operations Provided a Negative Net Cash Flow