1.6 JC DEALERS disclosed the following information in the statement of financial position:

Year	2016	2015
Debtors	R260 000	R220 000

The above mentioned information represents the following effect in the cash flow statement:

1. Cash inflow from investment activities of R40 000
2. Cash outflow from investment activities of R40 000
3. Cash outflow from operating activities R40 000
4. Cash inflow from operating activities of R40 000
5. None of the above (2)

1.7 A company with healthy profits is facing a cash shortage. Which one of the following events could account for this?

1. The recent acquisition (purchase) of equipment.
2. The shortening of the credit period granted to debtors.
3. An increase in dividends proposed by the directors.
4. Delaying payments to creditors.
5. None of the above. (2)

1.8 A company estimates that R20 000 of its R500 000 accounts receivable (debtors) will be uncollectible. Its allowance for credit losses presently has a credit balance of R18 000. The adjusting entry will include a ______ to the credit losses (bad debts) expense account.

1. Credit of R2 000
2. Debit of R2 000
3. Debit of R38 000
4. Credit of R38 000
5. None of the above. (2)

1.9 MINDIN Ltd has current assets that consists of bank: R20 000, debtors: R70 000 and inventory: R90 000. Current liabilities are R75 000. The acid test ratio (quick ratio) of MINDIN Ltd is:

1. 1,7 : 1
2. 0,8 : 1
3. 1 : 1
4. 1,2 : 1
5. 2,4 : 1 (2)

1.10 Which one of the following changes in accounting ratio from one year to the next, would please a companys management who is concerned with cash flow problems in their company?

1. Increase in inventory turnover rate from one year to the next.
2. Decrease in creditors payment period from one year to the next.
3. Increase in debt/equity ratio from one year to the next.
4. Increase in debtors collection period from one year to the next.
5. None of the above. (2)