Question : Decrease in Cash Credit. would result in inflow/outflow/no flow of Cash and Cash Equivalents:
Option 1: Inflow of cash
Option 2: Outflow of cash
Option 3: Neither inflow Nor outflow
Option 4: Cash and cash equivalent
Correct Answer: Outflow of cash
Solution : Answer = Outflow of cash A decrease in cash credit signifies a reduction in the available borrowing limit. If a business uses this credit line to withdraw funds, it leads to a decrease in their cash and cash equivalents. Cash credit is treated as a short-term borrowing facility offered by banks. Hence, the correct option is 2.
Question : Increase in Bank Overdraft; would result in inflow/outflow/no flow of Cash and Cash Equivalents:
Question : Writing off bad debts against the provision for doubtful debts; would result in inflow/outflow/no flow of Cash and Cash Equivalents:
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile