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: 4

Answer

Step1: The Major sources of inflow of cash as follaws: a) Operating activities b) Investing activities c) Financing activities Step2: The Major uses (outflows) of cash are as follows: a) Operating activities b) Investing activities c) Financing activities

Work Step by Step

Step1: a) Operating activities are the cash generated from revenues and expenses. These are the cash generated through net income. b) Investing activities are the cash received from disposing of investments and property, plant and equipment. It also includes receipts from collecting the loans. c) Financing activites are the cash obtained from issuing debt. This also includes cash receipts from stockholders, repurchasing shares. Step2: a) Operating activities indicates the cash outflow from transactions that involve revenues and expenses. These are the cash outflows from net losses. b) Investing activities gives the outflow by acquiring investments and property, plant and equipment. It also includes repayments of loans repaid. c) Financing activities are the repaying the amounts borrowed. This also includes repurchasing shares and paying dividends
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