Question

During the year, Next Tec Corp. had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000; payment to workers, $2,000; and payment for machinery, $8,000. What amount would be reported for net financing cash flows in the statement of cash flows?

Answer 1

The net financing cash flows is $5000 as shown below.

Step-by-step explanation:

The net financing cash flows is calculated below:

Receipt from bank for long-term borrowing $6000

Payment of dividends ($1000)

Net financing cash flows $5000

Receipt of $10000 relates to operating cash flows as it is cash receipt in the ordinary course of business

Payment to suppliers of $5000 is an operating cash flow as well as suppliers are paid for supplying the items that the business deals in, same applies to payment to workers of $2000.

Lastly, the payment for machinery of $8000 relates to investing activities of the business as it an expenditure incurred to generate more returns.