Question

The Laurel Company reported the following data for last year: Decrease in the Cash account $25,000 Net cash provided by operating activities 20,000 Net cash provided by investing activities 15,000 Based solely on this information, the net cash flows from financing activities on the statement of cash flows would be: a.$(30,000). b.$2,000. c.$(8,000). d.$(60,000).

Answer 1

D ($60,000)

Step-by-step explanation:

Cash flow is shows how changes in the balanced sheets and income statement affects cash and cash equivalent. Its aim is to know the availability of cash and cash equivalents available for business purpose , determined through the operating , financing and investing activities.

Workings

Cash generated from operating activities - 20000

Cash generated from investing activities - 15,000

Movement in cash account (25000)

Cash generated from investing account =( 20000+15000+25000) = (60000)

This means that an outflow of $60,000 through financing activity has an overall effect of outflow of $25,000 in the cash account.