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Questions and Answers
What is included in cash inflows from financing activities?
What is included in cash inflows from financing activities?
- Cash received from issuing common stock (correct)
- Cash received from interest income
- Cash received from long-term asset sales
- Cash received from sales of inventory
How are cash dividends reported in financing activities?
How are cash dividends reported in financing activities?
- As a cash outflow when dividends are paid (correct)
- As a cash inflow when stock dividends are issued
- As a cash inflow when dividends are declared
- As a non-cash activity on the balance sheet
What impact does the purchase of treasury stock have on the cash flow statement?
What impact does the purchase of treasury stock have on the cash flow statement?
- It is reported as part of operating activities
- It is recorded as a cash outflow (correct)
- It does not affect cash flows
- It is recorded as a cash inflow
Which of the following describes long-term liabilities in financing activities?
Which of the following describes long-term liabilities in financing activities?
In what context are stock dividends reported in the statement of cash flows?
In what context are stock dividends reported in the statement of cash flows?
What was the total cash inflow from issuance related to ShopMart's notes payable?
What was the total cash inflow from issuance related to ShopMart's notes payable?
Which entry reflects the issuance of common stock in ShopMart's cash flows?
Which entry reflects the issuance of common stock in ShopMart's cash flows?
What account would be affected by a cash outflow for retiring notes payable?
What account would be affected by a cash outflow for retiring notes payable?
Flashcards
Financing Activities
Financing Activities
These activities deal with long-term liabilities and equity accounts, impacting how a company raises funds and manages its capital structure.
Long-term Liabilities
Long-term Liabilities
A company's long-term debt obligations, like loans or bonds, represent money borrowed for extended periods.
Notes Payable
Notes Payable
Issued when a company needs additional funds. Money is received in exchange for a promise to repay with interest.
Common Stock
Common Stock
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Treasury Stock
Treasury Stock
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Retained Earnings
Retained Earnings
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Dividends
Dividends
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Cash Flows from Financing Activities
Cash Flows from Financing Activities
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Study Notes
Financing Activities
- Financing activities affect long-term liabilities and equity accounts (e.g., long-term notes payable, bonds payable, common stock, retained earnings)
- Cash flows from financing activities are determined by analyzing each account type
Long-Term Liabilities
- ShopMart's Notes Payable T-account is used to track cash inflows and outflows
- $90,000 cash received from issuing notes payable
- $10,000 cash paid to retire notes payable
- Notes payable transactions are listed first in the cash flow from financing section
Common Stock and Treasury Stock
- Cash flows for financing activities are also analyzed via stock accounts
- $120,000 cash received from issuing common stock
- $20,000 cash paid for purchasing treasury stock
Statement of Cash Flows Example
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ShopMart, Inc. statement of cash flows (partial), Year Ended December 31, 2024
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Cash receipt from issuance of notes payable: $90,000
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Cash payment of notes payable: ($10,000)
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Cash receipt from issuance of common stock: $120,000
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Cash payment for purchase of treasury stock: ($20,000)
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Net cash provided by financing activities: $170,000
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Net change in cash and cash balances: ($20,000
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Beginning cash balance (Dec 31, 2023): $42,000
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Ending cash balance (Dec 31, 2024): $22,000
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Description
Test your understanding of financing activities, including long-term liabilities and equity accounts. This quiz covers cash flow analysis for notes payable, common stock, and treasury stock based on ShopMart's financial activities. Perfect for accounting students looking to enhance their comprehension of cash flow statements.
