Inc. reported the following for the year 2017: Net cash flow provided by operati
ID: 3198603 • Letter: I
Question
Inc. reported the following for the year 2017:
Net cash flow provided by operating activities………….. $50,000
Net cash flows used by investing activities……………… $10,000
Cash balance, 1/1/2017…………………………………… $5,000
Cash balance, 12/31/2017………………………………… $20,000
Significant non-cash financing and investing activities:
Purchase of plant assets………………………………….. $12,000
The amount of cash provided (used) by financing activities for 2017 is
$10,000 used by financing activities
$13,000 used by financing activities
$25,000 used by financing activities
$37,000 used by financing activities
$10,000 used by financing activities
$13,000 used by financing activities
$25,000 used by financing activities
$37,000 used by financing activities
Explanation / Answer
We know that Net cash flow = cash flow from operating activities+ investment activities + financing activities
Net cash flow = change in cash component
change in cash compoennt = cash final - cash initial
cash flow from operating activities = 50,000
cash flow from investment activities = -10,000 (since it is "used be investing" mentioned)
cash flow from financing activities is to be found out
Hence,
change in cash component = cash flow from operating activities+ investment activities + financing activities
20,000-5,000 = 50,000 + (-10,000) + Financing
15000 = 40000 + Financing
Thus, financing = 15000 - 40000 = - 25000
Thus, amount of cash used (since negative sign is there) by financing activities for 2017 is = -25,000$
Thus, thrid option is correct.
Note: the non-cash financing and investign activities of purchae of plant assets of 12,000$ will not be accounted for in CASH FLOWS since it is a non-cash activitiy