Statement of Cash Flows
- Differentiate between cash inflows and cash outflows.
- What are internal sources of financing?
- What are external sources of financing?
- Why is depreciation/amortization considered a cash inflow?
- Identify the basic structure of the statement of cash flows.
- In the statement below, although cash increased in 2014, why is it considered a cash outflow?
LEARNING EXERCISES
EXERCISE 1: SOURCES OF CASH FLOWS
Identify, under the appropriate heading, whether the following changes are an inflow of cash or an outflow of cash. What amounts and percentages were used by internal and external sources to finance the purchase of the assets?
In $ | ||||
This | Last | Cash | Cash | |
Year | Year | Inflows | Outflows | |
House | 134,600 | 130,000 | ||
Trailer | 12,000 | —- | ||
Furniture | 5,600 | 4,000 | ||
Mortgage | 75,000 | 60,000 | ||
RRSP | 23,000 | 20,000 | ||
Loan made to a friend | —- | 5,000 | ||
Car loan | 12,000 | 8,000 | ||
Visa | 1,250 | 600 | ||
The Bay | —- | 450 | ||
Cash in the bank | 3,000 | 2,000 | ||
Marketable securities | 12,000 | 10,000 | ||
Total |
In % | |||||||
This | Last | Cash | Cash | ||||
Year | Year | Inflows | Outflows | ||||
House | 134,600 | 130,000 | |||||
Trailer | 12,000 | —- | |||||
Furniture | 5,600 | 4,000 | |||||
Mortgage | 75,000 | 60,000 | |||||
RRSP | 23,000 | 20,000 | |||||
Loan made to a friend | —- | 5,000 | |||||
Car loan | 12,000 | 8,000 | |||||
Visa | 1,250 | 600 | |||||
The Bay | —- | 450 | |||||
Cash in the bank | 3,000 | 2,000 | |||||
Marketable securities | 12,000 | 10,000 | |||||
Total | 100.0 | 100.0 | |||||
Note: Salary in excess of expenses is not a statement of cash flows account.
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