Question

When a company increases the amount borrowed on a line of credit, net income ______ and net cash flow from ______ activities increases.

A) Increases; financing
B) Decreases; investing
C) Decreases; financing
D) Increases; investing

Answer 1

When a company increases the amount borrowed on a line of credit, net income increases, and net cash flow from financing activities increases.

Step-by-step explanation:

When a company increases the amount borrowed on a line of credit, net income increases and net cash flow from financing activities increases. This is because borrowing money increases the company's income through interest payments, which is reflected in the net income. Additionally, when a company borrows money, it receives cash inflow, increasing the net cash flow from financing activities.