Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 12 - Statement of Cash Flows - Questions: 11

Answer

Step1: When the cash inflows exceeds the cash outflows in a statement of cash flow than that is identified through three types of activities. - Cash Flow from operating activities. Step2: Cash Flow from investing activities. Step3: Cash Flow from financing activities.

Work Step by Step

Step1: When cash received is more than the cash payments than excess of cash is shown in the net cash generated from operating activities. In such case net profit will be more and depreciation expense will be less. Working capital change will also be adjusted. Step2: Cash received from sale of investments and assets will be more than cash paid to purchase. Step3: Cash received from sale of shares will be more than cash paid to borrow funds Excess of cash received will be added to the opening cash to determine closing cash.
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