Problem 1: Identify whether the following items increase, decrease, or have no impact on cash flows:
- Increase in raw materials
- Decrease in accounts payable
- Decrease in accounts receivable
- Increase in finished goods
- Decrease in prepaid expenses
- Stock Dividend distribution to shareholders
- Increase in accrued expenses
- Increase in bank loans
- Purchase of a machine
Provide a rationale for your selection.