Question

The following information is known about A Company at December 31, 2019:

Cash at the beginning of the year (1 January, 2019) 3,000 Eur

Accumulated amortization 20,000 Eur

Amortization expense 5,000 Eur

Increase in accounts payable from purchase of supplied and merchandise 8,000 Eur

Sale of vehicles 13,000 Eur

Purchase of land 8,000 Eur

Gain on sale of vehicles 2,000 Eur

Purchase of equipment 1,000 Eur

Net income 17,000 Eur

Received a 2-years bank loan of 6,000 Eur

Indicate the following missing information:

According to data given above, the company can prepare a cash-flow statement according to _______  method. (Which method?)

Cash ending balance at 31 December is _______

Net cash flow from operating activities is _____

Net cash flow from investing activities is _______

Net cash flow from financing activities is ______

Answer 1

Cash flow statement as per Indirect method

	Eur	Eur
Cash at beginning on 01 Jan. 2019		3000
Net income	17000
Add:
Amortization expenses ( It is a non cash expenses therfore it is added to calculate cash inflow)	5000
Increase in accounts payable	8000
Less:
Gain on sale of vehicle	(2000)
Cash flow from Operating activity		28000
Cash flow from Investing activity
Sale of vehicle	13000
Purchase of land	(8000)
Purchase of equipment	(1000)	4000
Cash flow from Financing activity
Bank loan received	6000	6000
Cash balance at the end 31 Dec.2019		41000

1. Accumulated amortization is a cummulative expenses it is neither charged to income statement nor appear on cash flow statement
2. Gain on sale of vehicle it is a capital reciepts not included in income statement for cash flow purpose.