Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

Financial Accounting

13. Statement of Cash Flows

Introduction to the Statement of Cash Flows

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Multiple Choice

Based on the following information, compute the cash flows from investing activities under GAAP:- Purchase of equipment: \$25,000- Sale of land: \$15,000- Purchase of inventory: \$5,000- Sale of investments: \$10,000What is the net cash flow from investing activities?

$0, because purchases and sales offset each other

$20,000

-$10,000

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Verified step by step guidance

Identify the transactions that are classified as investing activities under GAAP. Investing activities typically include the purchase and sale of long-term assets and investments, such as equipment, land, and securities. Exclude transactions related to operating activities, such as the purchase of inventory.

List the cash outflows from investing activities. In this case, the purchase of equipment for $25,000 is a cash outflow. Represent this as a negative value: -$25,000.

List the cash inflows from investing activities. These include the sale of land for $15,000 and the sale of investments for $10,000. Represent these as positive values: +$15,000 and +$10,000.

Calculate the net cash flow from investing activities by summing all cash inflows and outflows. Use the formula: Net Cash Flow = (Cash Inflows) - (Cash Outflows). In MathML, this can be represented as:

Net Cash Flow = (Cash Inflows) - (Cash Outflows)

Substitute the values into the formula: Net Cash Flow = (+$15,000 + $10,000) - ($25,000). Simplify the expression to determine the net cash flow from investing activities.