Question

Wayne Deng is reviewing the statement of cash flows for his technology business. The Statement has...

Wayne Deng is reviewing the statement of cash flows for his technology business. The Statement has been provided by his accountant. He is dismayed that the statement shows net cash outflows for investing activities.

Marks: 10

  1. Explain to Wayne what the cash flow from investing activities section of the cash flow statement shows.
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Answer #1

Answer: Cash flow Investing Activities :

  • In accounting  investing activities refers to sale and purchase of long term assets and other business investments.
  • Cash outflows fron Investing Activities shows that company has used cash in the purchase of non current assets or long term assets.
  • These assets will provide return or will deliver value in future.
  • This shows that company is investing in future options.
  • In the instant case cash is used in technology business, it shows that company has invested or used cash in the purchase of technological asstes for their business advancement.
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