Cash Flows

Question 1

Operating activities

Answer 1

All cash flows related to the firms day-to-day trading activities
REVENUES
EXPENSES
CA

Question 2

Investing activities

Answer 2

Cash flows related to the purchase and sale of non current assets
NCA

Question 3

Cash flow statement

Answer 3

Aids decision making as it allows the owner to identify sources and uses of cash, and assess whether the business is generating sufficient operating cash. This will help to identify problem areas do corrective action can be taken (particularly when compared against the budgeted cash flow statement)

Question 4

Cash vs Profit

Answer 4

Cash and profit are different resources. Cash is measured by cash inflows minus cash outflows, and net profit is calculated by revenues earned minus expenses incurred

Question 5

Financing activities

Answer 5

Cash flows that is related to a change in the financial structure of the firm
OE & NCL