139 your best friend just lost his job because the company he was working for went b 4305861

139 your best friend just lost his job because the company he was working for went b 4305861

139) Your best friend just lost his job because the company he was working for went bankrupt. He was complaining to you that even though the company had been profitable for three years in a row, it still went out of business. He asks you how this can happen.

a) Explain the most likely reason for the company's declaring bankruptcy. Could your best friend have seen it coming? How?

b) Discuss the four purposes of the cash flow statement.

140) Indicate the effect that each of the following transactions has on the cash balance. Use + for increase, – for decrease, and 0 for no change.

________  a) Payment of salaries

________  b) Payment of interest

________  c) Payment of dividends

________  d) Sale of common shares

________  e) Payment of accounts payable

________  f) Sale of merchandise for cash

________  g) Acquisition of patent by issuing common shares

________  h) Conversion of debt to common shares

________  i) Receipt of cash dividends

________  j) Receipt of stock dividends

________  k) Purchase of land

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