Question

R.V. Motors had $80,000 in cash at year-end 2012 and $30,000 in cash at year-end 2013. Cash flow from long-term investing activities totaled $–200,000, and cash flow from financing activities totaled $240,000. What was the cash flow from operating activities?

	a.	$150,000
	b.	$–90,000
	c.	$–10,000
	d.	$90,000
	e.	$10,000

Answer 1

Solution:-

Cash flow statement of R.V.MOTORS at the end of 2013.

PARTICULAS	AMOUNT($)
Opening cash and cash equivalents at the end of 2012	80,000
Cash flow from operating activities	(90,000)
Cash flow from investing activities	(200,000)
Cash flow from financing activities	240,000
Closing cash and cash equivalents at the end of 2013	30,000

Working note:-

Let us assume cash flow from operating activities be X.

opening balance+cash flow from operating activities+cash flow from investing activities+cash flow from financing activities = closing balance

$80,000+ X +(200,000)+240,000 = 30,000

X + 120,000 = 30,000

X = 30,000-120,000

= -$90,000 or ($90,000)

NOTE:- ( ) refers not favourable balance which means negative.

Hence, the cash flow from operating activities is $-90,000 which is OPTION B