The payment of cash to retire a long-term note should be shown on a statement of cash flows under the financing activities section. The proceeds from the sale of a building the purchase of a long-term investment in the common stock of another company are investing activities cash flows.
Which activities are reported on the statement of cash flows?
Statement of cash flows: Statement of cash flows includes cash flows from operating, financing and investing activities. Operating activities include the production, sales, and delivery of the company’s product as well as collecting payments from its customers.
Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?
Issuance of long-term debt
Correct answer: Option (d) Issuance of long-term debt. This transaction results in a financing cash inflow and is reported under the cash flow statement.
Which of the following does not represent an outflow of cash and therefore would not?
The correct option is (c) Discarding an asset that had not yet been fully depreciated. As discarding an asset that had been fully depreciated, would not result in any impact on the cash and cash equivalent of the business. This cannot be considered as a cash outflow and would not be reported in the cash flow statement.
Which of the following is an example of cash flows from operating activities?
Examples of cash inflows from operating activities are: Cash receipts from the sale of goods and services. Cash receipts from the collection of receivables. Cash receipts from lawsuit settlements.
When preparing a statement of cash flows using the indirect method which of the following is correct?
When preparing a statement of cash flows using the indirect method, which of the following is correct? Proceeds from the sale of equipment should be added to net income in the operating activities section. A loss on the sale of land should be added to net income in the operating activities section.
Which of the following is an inflow of cash?
Answer ‘C’ (the sale of the firm’s bonds) would be considered an inflow of cash, since upon the sale, cash would be received.
Which of the following represents cash inflow from operations?
Examples of cash inflows are – Cash proceeds from issuing shares or other similar instruments, cash receipts from disposal of fixed assets including intangibles, cash receipts from sale of goods and rendering services.
What is the treatment of depreciation in cash flow statement?
Depreciation in cash flow statement Why is depreciation added in cash flow? It’s simple. Depreciation is a non-cash expense, which means that it needs to be added back to the cash flow statement in the operating activities section, alongside other expenses such as amortization and depletion.
Which of the following is incorrect about statement of cash flows?
The correct answer is c. It reconciles the ending cash account balance to the balance per the bank statement. The cash flow statement records the cash movements of the organization.
What is cash flow per share?
Cash flow per share is the after-tax earnings plus depreciation on a per-share basis that functions as a measure of a firm’s financial strength. Many financial analysts place more emphasis on cash flow per share than on earnings per share (EPS).
What are the implications of positive cash flows from operations?
Positive (and increasing) cash flow from operating activities indicates that the core business activities of the company are thriving. It provides as additional measure/indicator of profitability potential of a company, in addition to the traditional ones like net income or EBITDA.
