Cash Flow from Investing Activities

What Is Cash flow From Investing Activities? Cash flow from investing activities typically refers to cash generated in a company by making or selling investments and/or earning from it. Cash flow from investing activities is a major component of cash flow statement which is one of the four annual financial statements that are prepared by …

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Cash Flow Statement Practical Problems and Solutions

Cash flow statement practical problems and solutions are prepared by our professional accounting team for the students to get clear their concepts and prepare for their exams and interviews. Problem No. 1 From the summarized cash book of Zenith Ltd. calculate net cash flow from operating activities. Zenith Ltd.  Summarized Cash Book Particulars $ Particulars …

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Cash Flow Statement (CFS)

What is a Cash Flow Statement? A Cash Flow Statement (CFS) is a financial statement primarily intended to provide information about the cash receipts and cash payments of a business during the period of time covered by the income statement. It is vital to keep track of cash flows on a continuing basis in order …

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Sources of cash

In any given period cash will be generated by any of the following activities: Net profit made in the period. Increase in share capital during the year. Increase in any liability during the year Decrease in any asset during the year Let us consider each of the above sources in some detail. Net Profit as …

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How to prepare a statement of cash flows

We will first prepare a cash flow statement of a sole trader’s business, as this will be easier than of a limited company. Example: John Bros. started a business on 1st January 2017 with cash $2,50,000. They purchased furniture for cash $35,000. They submitted the following information on 31st December 2017. Purchased merchandise for $85,000 …

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Reporting cash flows from operating activities

An enterprise can report cash flows from operating activities using any one method of the following: The Direct methods: Whereby major classes of gross cash receipts and gross cash payments are disclosed The indirect method: Whereby the profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals …

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Cash flow from financial activities

Explanation Financing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the entity. The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of capital to the enterprise. The following …

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Cash flow from investing activities

Explanation Investing activities are the acquisition and disposal of non-current assets and other investments not included in cash equivalents. The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. The …

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Cash flow from operating activities

Cash flow from operating activities (CFO) means the sufficient amount of cash generated from the regular operations of an enterprise to maintain its operational capabilities. What are the operating activities? Operating activities are the transactions that enter into the calculation of net income, such as cash receipts from the sale of goods and services, cash …

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Adjusted Net Profit

Definition and Explanation After the adjustments shown above, we arrive at the Adjusted Net Profit which appears as the first item on the sources side of the Cash Flow Statement. One can show these adjustments within the body of the Cash Flow Statement, or prepare a separate statement to compute the Adjusted Net Profit and …

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Non cash Incomes

Definition and Explanation Just as non-cash expenses do not result in cash outflow, non-cash incomes do not lead to cash inflow and must, therefore, be excluded from the year’s profit. The two examples of non-cash incomes are appreciation in value of a fixed asset arising out its revaluation, and profit on sale of a fixed …

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Non cash Expenses

Definition and Explanation Certain items are debited to Profit and Loss Account (or Income Statement) as an expense though they are not paid out in cash in that particular period. The most obvious example of such non-cash expenses is depreciation. By debiting the amount of depreciation in the Income Statement, we lower the amount of …

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What is meant by Funds?

The word funds could mean either of two things: cash or working capital. Cash will include cash at bank, cash in hand and perhaps short-term investments; while working capital is the excess of current assets over current liabilities. The preparation of a Funds Flow Statement depends on what meaning of the term Funds is being used. …

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Cash flow statement MCQs

Take a quick Multiple Choice Questions (MCQs) test about Cash flow statement. These MCQs can help you to prepare for your exams, interviews and different tests. Just click the “start quiz” button and start Cash flow statements MCQs quiz. If you find difficulty in answering these questions, read ‘Cash flow statement‘ chapter thoroughly from the …

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