Question

Suppose AF company uses the indirect method to prepare the cash flow statement. Indicate which of...

Suppose AF company uses the indirect method to prepare the cash flow statement. Indicate which of the following items will appear in the cash flow from financing activities section of the cash flow statement. [Tick all that apply].

Cash paid to buy back bonds

Cash paid to buy back company's own stock

Cash paid to purchase equipment.

Cash proceeds from the sale of the equipment

Depreciation expense

Dividends paid

Gain on the sale of the equipment

Interest expense

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Answer #1

Cash flow from financial activities is a section of a company's cash flow statement, which shows the net flows of cash that are used to fund the company. Financing activities include transaction involving debt, equity, and dividends.

In the above question items will appear in the cash flow from financing activities of the cash flow statement are:-

  • Cash paid to buy back bonds
  • Cash paid to buy back company's own stock
  • Dividend paid
  • Interest expenses

Note :- we assume that the AF company is not a financial institution and the primary business of the company is not financial activities ; like providing loan on interest etc.

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