We appreciate your visit to During the year Next Tec Corp had the following cash flows Receipt from customers 20 000 Receipt from the bank for long term borrowing 6. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
Answer:
Net inflow from financing activities = $4,400
Explanation:
Provided information,
Financing Activities are those activities which are done to get finance for the company, that is any expense related to generation of funds for the company, or any funds raised.
Here Financing activities are:
Receipt from bank for long term borrowings = $6,400
Less: Payment of dividend = $2,000
Net inflow from financing activities = $4,400
Purchase of machinery is investing activity, payment to workers is operating activity, payment to suppliers is operating activity, Receipt from customer is operating activities.
Net inflow from financing activities = $4,400
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Answer:
The $4,400 is the amount which should be reported for net financing cash flows on the Statement of Cash Flows.
Explanation:
Financing activity: The financing activity is that activity that involves long term liabilities transactions. For example the issue of shares, the redemption of bonds/ debentures, dividend payment ,etc.
The amount which is reported for net financing activity is shown below:
= Receipts from the bank for long - term borrowing - payment of dividend
= $6,400 - $2,000
= $4,400
The receipts from a customer is an operating activity which is come under the direct method of cash flow statements.
Again, payment to suppliers and payment to workers is also an operating activity which comes under the direct method of cash flow statements.
And, the payment of machinery is an investing activity
Thus, these transactions are not considered.
Hence, the $4,400 is the amount which should be reported for net financing cash flows on the Statement of Cash Flows.
