Question

Classifying inflows and outflows of cash   Classify each of the following items as an inflow​ (I) or an outflow​ (O) of​ cash, or neither​ (N). Item Change​ ($) Item Change​ ($) Cash Balance negative 300 Accounts receivable plus 1 comma 700 Accounts payable negative 1 comma 200 Net profits plus 900 Notes payable plus 1 comma 500 Depreciation plus 1 comma 100 ​Long-term debt plus 1 comma 000 Repurchase of stock plus 900 Inventory plus 200 Cash dividends plus 800 Fixed assets plus 400 Sale of stock plus 1 comma 000

Answer 1

To classify the items as inflows (I) or outflows (O) of cash, you need to determine whether each item represents a change in cash balance. Examples and explanations are provided for each item.

Step-by-step explanation:

To classify each of the following items as an inflow (I) or an outflow (O) of cash, or neither (N), we need to determine whether each item represents a change in cash balance.

Cash Balance negative 300: Outflow of cash (O)

Accounts receivable plus 1 comma 700: Neither (N), as accounts receivable represents amounts owed to the company but does not involve a direct change in cash.

Accounts payable negative 1 comma 200: Inflow of cash (I), as negative accounts payable indicates a reduction in the amount owed by the company.

Net profits plus 900: Inflow of cash (I), as net profits represent the amount earned by the company.

Notes payable plus 1 comma 500: Inflow of cash (I), as an increase in notes payable represents borrowing money.

Depreciation plus 1 comma 100: Neither (N), as depreciation is a non-cash expense that represents the decrease in value of an asset.

Long-term debt plus 1 comma 000: Inflow of cash (I), as an increase in long-term debt indicates borrowing money.

Repurchase of stock plus 900: Outflow of cash (O), as repurchasing stock involves spending cash to buy back the company's own shares.

Inventory plus 200: Outflow of cash (O), as an increase in inventory requires spending cash to purchase more goods for sale.

Cash dividends plus 800: Outflow of cash (O), as cash dividends involve distributing earnings to shareholders.

1. Fixed assets plus 400: Neither (N), as adding fixed assets represents a non-cash transaction.
2. Sale of stock plus 1 comma 000: Inflow of cash (I), as selling stock brings in cash from investors.

Answer 2

The item has been classified or arranged as either inflow and outflow as follows;

Where as :O represent Outflow

I represent Inflow

Items $Change

Cash - 300 O

Accounts receivable 1,700 I

Accounts Payable -1,200 O

Net profits 900 I

Notes payable 1,500 I

Depreciation 1,100 I

Long-term debt 1,000 O

Repurchase of stock 900 O

Inventory 200 O

Cash dividends 800 O

Fixed assets 400 O

Sale of Stock 1,000 I