Operating, Investing, & Financing Activities

Question 1

Operating Activities - Direct Method

Answer 1

Cash Inflows (received):

1. From customers
2. Interest income or dividend income
3. Sale of trading investments

Cash Outflows (paid):

1. To supplies and employees
2. To government
3. Purchase of trading investments
4. For interest or other operational expenses

Question 2

Investing Activities

Answer 2

Cash Inflows:

1. Sales of property, plant, & equipment
2. Sale of debt or equity securities of other entities
3. Collection of loan principal

Cash Outflows:

1. Purchase of property, plant, & equipment
2. Purchase of debt or equity securities of other entities

Question 3

Financing Activities

Answer 3

Cash Inflows:

1. From the sale of the entity’s own equity securities
2. From issuance of debts (bonds and notes)

Cash Outflows:

1. Payment of dividends
2. Paying back lenders (principal only)
3. To re-acquire capital stock (treasury stock)