Question

Indicate whether the account is an Operating Cash Flow (O); Cash Flow From Investment (I) or Cash Flow from Financing (F) also indicate whether the activity is a Source (+) or Use (-) of funds.

__________ Increase in Accounts Receivable

__________ Increase in Accounts Payable

___________ Increase in Notes Payable

___________Payment of Cash Dividends to Shareholders

___________ Increase or purchase of equipment

Answer 1

Increase in Accounts Receivable - This Means that my Sales are Increasing but the same are not realized in Cash. Rather my Debtors are increasing. This is an Operating Cash Inflow Item as it involves the transactions with the regular day to day operations of the business.

Increase in Accounts Receivable - O and (-)

Increase in Accounts Payable - This Means that my Purchases are Increasing but the same are not paid out in Cash. Rather my creditors are increasing. This is an Operating Cash Out Flow Item as it involves the transactions with the regular day to day operations of the business.

Increase in Accounts Payable - O and (+)

Increase in Notes Payable - This means that for capital needs my Debt portion is increasing. This is a Financing item and so this is a Cash In Flow from Financing Activity. Since The Notes Payable is increasing which means more inflow of Cash as a result of increase in notes payable

Increase in Notes Payable - F and (+)

Payment of Cash Dividend to Shareholders - This means that shareholders are paid Dividend . This is a Financing item and so this is a Cash outflow Flow from Financing Activity. Since Dividend is being paid out which means Cash outflow  as a result of payment.

Payment of Cash Dividend to Shareholders - F and (-)

Increase or Purchase of Equipment - This means that cash is being invested in an equipment/ Plant And Machinery/ Tangible Asset. Since the equipment is being purchased, this involves Cash Outflow for purchasing the same. As the Amount is being invested in the form of equipment this is a cash outflow from Investing Activities.

Increase or Purchase of Equipment - I and (-)