lce Galery ermine cash flows from both investing and financing activities Slide
ID: 2536041 • Letter: L
Question
lce Galery ermine cash flows from both investing and financing activities Slide 7 - Background information: Net Income Cash received from issuing stock Cash received from sale of plant assets Increase in incorme taxes payable Loss on sale of plant assets 52,000 4,000 35,000 124,000 22,000 Question 1 ot1 The cash provided (used) by investing and financing activities is best descnbed as cash provided by investing activities of $35,000 and cash provided by financing activities of $2.000 eash used by investing activities of $13,000 and cash used by finaneing activities of $74,000 cash provided by investing activities of $35,000 and cash provided by financing activities of $74,000 vided by investing activities of $13,000 and eash provided by financing activities of $74,000 cash used by investing activities of $35,000 and cash used by financing activities of $82,000 Slide 7 ANKSExplanation / Answer
Answer is Option 3.
It should be noted that
-Cash Flow statement is started by making base as Net Income.
- Cash received from issuing stock falls under cash received under Financing activity.
- Cash received from sale of a plant is convered under Cash Flow under invseting categories.
- Increase/ decrease in Income tax payable is covered under Operating activites of Cash Flow
- Loss on sale of fixed asset is a non-cash expense which is treated under Cash Flow- Operating Activities.
In Our question,
Cash received from issuing stock ($74,000) will be treated as Cash flow arising from financing categories.
Cash received from sale of asset ($35,000) will be treated as Cash flow arising from Investing categories.
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