Concept explainers
Cash Flow Statement:
Cash flow statement is that statement in which, transaction related to cash are recorded. It is mandatory report and included in the financial statement of the company. It is divided into three parts operating activities, investing activity, and financial activity
Operating Activity:
Operating activity is the first part of the cash flow statement. The main focuses of the operating activity on the
Financing Activity:
Financing activity is the part of the cash flow statement. Financing activity involves the long term liability, borrowing and
Investing Activity:
Investing activity is the third part of the cash flow statement which gives the information related to the acquisition and disposal of the long term assets of the company such as land and building, investment and plant.
To prepare: Statement of
Explanation of Solution
Statement of cash flow |
Amount ($) |
Operating activities |
|
Net income (a) |
114,975 |
Increase in |
(15,185) |
Increase in inventory(c |
(23,856) |
Decreased in prepaid expenses(d) |
625 |
Decreased in account payable (e) |
(61,534) |
|
20,750 |
Loss on sale of equipment(g) |
5,125 |
Cash from operating activities |
40,900 |
Investing activities |
|
Cash from equipment sale (g) |
11,625 |
Cash paid for equipment purchased (h) |
(30,000) |
|
(18,375) |
Financing activities |
|
Cash receipt from short term notes payable(i) |
4,000 |
Cash paid toward long term notes payable (k) |
(50,125) |
Cash received by issuing share(l) |
50,000 |
Cash paid as dividend |
(50,100) |
Cash outflow from financing activities |
(46,225) |
Net decrease in cash |
(23,700) |
Cash at hand at the end of 2014 |
73,500 |
Cash at hand at the end of 2015 |
49,800 |
Table (1)
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Chapter 12 Solutions
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