What is the overall change in cash at the end of Year 2 after all events (including financing)?

What is the overall change in cash at the end of Year 2 after all events (including financing)?

• A. Decreases by $70
• B. Increases by $70
• C. Decreases by $2
• D. Increases by $2

Answer: (A)

Net change in cash is the sum of cash flows from operating, investing, and financing activities. Since financing is included, you account for cash inflows (borrowing, issuing equity) and cash outflows (debt repayments, dividends, other financing uses). In this scenario, after tallying all the events, the overall effect on cash is a decrease of $70. So ending cash is $70 lower than the beginning of Year 2. The other possible net changes would require different totals of inflows and outflows from the year’s activities, which isn’t supported by the events given.

Net change in cash is the sum of cash flows from operating, investing, and financing activities. Since financing is included, you account for cash inflows (borrowing, issuing equity) and cash outflows (debt repayments, dividends, other financing uses). In this scenario, after tallying all the events, the overall effect on cash is a decrease of $70. So ending cash is $70 lower than the beginning of Year 2. The other possible net changes would require different totals of inflows and outflows from the year’s activities, which isn’t supported by the events given.