Statement of Cash Flows

Question 1

What type of activity (operating, investing, financing) is interest paid?

Answer 1

Operating activity. Interest paid/payable is a current liability, so it is an operating activity.

Question 2

What type of activity (operating, investing, financing) is dividends paid?

Answer 2

Financing activity. Dividends paid/payable are equity, so it is a financing activity.

Question 3

What portions of the balance sheet make up the cash flow from operations?

Answer 3

Current assets and current liabilities

Question 4

What portions of the balance sheet make up the cash flow from investing?

Answer 4

Noncurrent assets

Question 5

What portions of the balance sheet make up the cash flow from financing?

Answer 5

Noncurrent liabilities and equity

Question 6

How to arrive at cash flows from operations using the indirect method?

Answer 6

Net income

Noncash adjustments:
Add: non-cash expenses
Less: non-cash income

Non-operating adjustments:
Add/less: loss/gain from non-current asset sale

Working capital adjustments:
Add/less: increase/decrease in CL
Add/less: decrease/increase in CA

Cash flow from operating activities