Question

Classify cash inflows and outflows as relating to operating, investing, or financing activities.

Answer 1

Cash Inflows:

Cash Outflows:

1. Operating Activities:

1. Operating Activities:

a)

Cash sales

a)

Cash purchase

b)

Cash received from debtors

b)

Cash paid to supplier & employees

c)

Royalty received

c)

Income tax paid

d)

Commission received

d)

Manufacturing & Operating expenses

e)

Cash received from extra ordinary items

e)

Cash paid for extra ordinary items

2. Investing Activities:

2. Investing Activities:

a)

Sale of fixed assets

a)

Purchase of Fixed assets

b)

Sales of Investment

b)

Purchase of Investment

c)

Interest on investment

c)

Purchase of other institutions share & debentures

d)

Dividend received

e)

Loan to subsidaries

3. Financing Activities:

3. Financing Activities:

a)

Issue of Share Capital

a)

Redemption of Shares

b)

Issue of Debentures

b)

Redemption of Debentures

C)

Loan taken

C)

Repayment of loan

d)

Security permium

d)

Dividen paid

e)

Interest paid on borrowings