Below Is an Example of an Incorrectly Prepared Statement of Cash

Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct.
$\begin{array}{l}\text { Cash from operating activities }\\\begin{array}{lr}\text { Net Income } & \$ 60,000 \\\text { Depreciation } & (4,000) \\\text { Increase in accounts receivable } & (2,000) \\\text { Increase in deferred tax liability } & (1,000) \\& \$ 53,000 \\\hline\text{Cash from investing activities}&\\\text{Purchase of marketable securities}&\$(48,000) \\\text{Dividends paid}&\$(1,500) \\& \$(46,500) \\\hline\text{Cash from financing activities}&\\\text{Increase in Short-term debt}&\$(500) \\\text{Increase in Long-term debt}&(2,500) \\&\$(3,000) \\\text{Increase in cash}&\$ 3,500 \\\end{array}\end{array}$
-The management of a company wishes to window-dress its cash flow from operations. Which of the following will improve cash flow from operations?
I. factoring accounts receivable
II. paying suppliers more quickly
III. selling of some excess marketable securities
IV. deferring payment of taxes

A) IV only
B) III and IV
C) II, III and IV
D) I and IV

Correct Answer:

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