MODULE - 6A
Cash Flow Statement
Analysis of Financial Statements
Illustration 4
Classify the following into cash flows from operating activities investing
activities financing activities
(a) Cash sale of goods
Notes
(b) Cash paid to suppliers of raw material
(c) Cash payments of salaries and wages to employees.
(d) Cash payment to acquire fixed assets
(e) Cash proceeds from issues of shares at premium.
(f) Payment of dividend
(g) Interest received on investment
(h) Interest on debenture
(i) Payment of income tax
(j) Cash payment of a long term loan
Solution
A. Cash Flow from operating Activities
(a) Cash sale of goods : Normal business activity of selling Inventories
or goods (Cash inflow)
(b) Cash paid to suppliers of raw materials
Routine payments for purchasing the goods (Cash outflow)
(c) Cash payment of salaries and wages :
Cash payments to employees for their services in the office (Cash
outflow)
(i) Payment of Income Tax : Payment of tax on business Income (Cash
outflow)
B. Cash Flow from investing Activities
(a) Cash payment to acquire fixed assets : Purchase of long term
assets (Cash outflow)
(b) Interest received on Investment : it is an Income on Investment
(Cash inflow)
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ACCOUNTANCY