Question 4

Question

A company bought $50,000 of inventory for $20,000 cash, with the balance due to the supplier in 30 days. What is the operating cash flow in this transaction?

($50,000)

($20,000)

$0

($70,000)

($30,000)

1 point
5.
Question 5
Which of the fo

Answer 1

To determine the operating cash flow for the transaction described in Question 4, we need to consider the cash outflows and inflows related to operating activities.

In this case, the company bought $50,000 worth of inventory for $20,000 cash, with the remaining balance of $30,000 due to the supplier in 30 days. The operating cash flow only considers the cash transactions that have occurred.

Since $20,000 was paid in cash to acquire the inventory, the operating cash flow from this transaction is:

• Cash outflow: $20,000 (cash spent)
• Cash inflow: $0 (since no cash was received)

Therefore, the operating cash flow for this transaction is:

Operating Cash Flow = Cash Inflows - Cash Outflows = $0 - $20,000 = ($20,000)

So, the answer is:

($20,000).

If you have a follow-up question (like Question 5), feel free to provide the details.