Question

A company had cash flows during the year as follows: $50,000 received from short-term borrowing, $10,000 paid to purchase treasury stock, $15,000 paid to stockholders as dividends, and $15,000 to purchase plant assets. What is the amount of net cash flows from financing activities during the year

Answer 1

$25,000

Step-by-step explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

The amount of net cash flows from financing activities during the year

= $50,000 - $10,000 - $15,000

= $25,000

Answer 2

Net cash flow=$25000

Step-by-step explanation:

The net cash flow from financing activities includes that entails any or a combination of the following; issuance and redemption of stocks , issuance and redemption of debts and payment of interest and/or dividend, and receipt of dividend and or interest.

The net cash flows= 50,000 -10,000 -15,000 = $25000

Kindly note that the purchase of plants assets is not a financing activity but investment