7. General - Statement of Cash Flows

Give a 5 examples of cash inflows from operating activities.

1. Collecting interest

2. Collecting income tax refund

3. Collecting to settle lawsuit

4. Collecting dividends

5. Selling inventory / Providing services

Give 5 examples of cash outflows from operating activities

1. Purchasing inventory

2. Paying for operating expenses

3. Paying interest

4. Paying income tax

5. Paying to settle lawsuit

Give 4 examples of cash inflows from investing activities.

1. Selling debt or equity investments

2. Selling property and equipment

3. Selling intangible assets

4. Collecting notes receivable

Give 4 examples of cash outflows from investing activities.

1. Purchasing debt or equity investments

2. Purchasing property and equipment

3. Purchasing intangibles

4. Lending with notes receivable

Give 3 examples of cash inflows from financing activities.

1. Issuing notes payable

2. Issuing bonds

3. Issuing own stock

Give 4 examples of cash outflows from financing activities.

1. Repaying principal on notes payable

2. Repaying principal on bonds

3. Purchasing own stock

4. Paying dividends

What does the operating activities section statement of cash flows compute?

Net cash provided by operating activities / Net cash flows from operating activities

For transactions relating to investing and financing activities, how do we figure out the cash flows?

We can reconstruct the transaction using t-accounts or journal entries and see if there is a debit or credit to the Cash account.

• For example, If a company issues 3,000 shares of common stock at par for $5 a share, the reconstructed journal entry will have a Debit to cash of $15,000 and Credit Common Stock for $15,000.
  
  This would be reported as cash received from issuing stock $15,000 (Under cash flows from financing activities section of the statement of cash flows)

What is payment of interest classified as?

An operating activity

What is payment on principal of notes and bonds classified as?

A financing activity