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Classifying inflows and outflows of cash/ Cash flow concepts

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Classify each of the following items as an inflow ( I) or an outflow ( O) of cash, or as neither ( N) (See attachment "Classifying inflow for items")

Classifying inflow and outflow of cash
Items Changes
Cash +100
Account payable -1,000
Note payable +500
Long-Term Debt -2,000
Inventory +200
Fixed Asset +400
Account Receivable -700
Net Profits +600
Depreciation +100
Repurchase of stock +600
Cash dividends +800
Sales of stock +1000

Cash Flow Concept
Cash Sales
Credit Sales
Account Receive are collective
Assets with 5 yrs life is purchased
Depreciation is taken
Amortization of goodwill is taken
Sales of common stock
Retirement of outstanding bonds
Five insurance premium is paid for the next 3 yrs

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Solution Summary

Tutorial gives you the classifications and discusses how each transaction impacts the cash flow.

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Cash flow statement purposes

The primary purpose of a statement of cash flows is to provide relevant information about the cash receipts and cash payments of a company during a specific time period. The other financial statements do not provide any information related to the cash flows of the company. Thus, the Financial Accounting Standards Board requires that a Statement of Cash Flows be prepared and presented with the other financial statements.
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