FIN 3715 exam 1 review chapter 3

statement of cash flows changes are divided into 3 categories

1. operating activity 2. investment activity 3. financing activity

uses of cash

a firm's activities in which cash is spent, also called applications of cash

sources of cash

a firm's activities that generate cash

statement of cash flows

a firm's financial statement that summarizes its sources and uses of cash over a specified period

which of the following is an example of a source of cash?

acquisition of debt

sources of cash examples

cash inflow decrease in asset account (accounts receivable, inventory, and net fixed assets) increase in liability or equity account (accounts payable, other current liabilities, and common stock)

uses of cash examples

cash outflow increase in asset account (cash and other current assets) decrease in liability or equity account (notes payable and long-term debt)

on the statement of cash flows, which of the following are considered operating activities?

costs of goods sold decrease in accounts payable interest paid

which of the following is a use of cash?

decrease in common stock

what is an example of a source of cash?

decrease in inventory

according to the statement of cash flows, an increase in interest expense will __________ the cash flow from ___________ activities

decrease, operating

investment activity

includes changes in fixed assets

financing activity

includes changes in notes payable, long-term debt, and equity accounts, as well as dividends

operating activity

includes net income and changes in cmost current accounts

which of the following is a source of cash?

increase in accounts payable

on the statement of cash flows, what are considered financing activities?

increase in long-term debt dividends paid

according to the statement of cash flows, a decrease in accounts receivable will __________ the cash flow from ___________ activities

increase, operating

cash outflow

occurs when we buy assets, buy back debt instruments (pay off some debt), or buy back stock shares

cash inflow

occurs when we sell assets, sell debt instruments (take on more debt), or sell stock shares

the sources and uses of cash over a stated period of time are reflected on the:

statement of cash flows

activities of a firm which require the spending of cash are known as:

uses of cash