Question

QUESTION 11 Lending money and collecting the loans are Not yet answered Marked out of 1.00 Select one P Flag question a. Non-cash investing and financing activities b. Operating activities O c. Financing activities d. Investing activities QUESTION 12 Not yet answered In the month of April, Mazaya Company Inc wrote checks in the amount of R.0.18.500. In May, checks in the amount of R.O.25.316 were written in April, R016.936 of these checks were presented to the bank for payment, and R.0.21,676 were presented in May. What is the amount of outstanding checks at the end of May? Marked out of 1.00 P Flag question Select one a R0.1.564 Ob R0.5.204 OcR03,640 d.R.O.7.190

Answer 1

Cash flow of a company is veryimportant concept. During the year cash will come into the businessfrom different sources. Also cash will go out from the business.All such cash inflows and outflkows are represented in a statementknown as cash flow statement. Ascertain total cash flow of theyear. It is added with opening balance to get closing cashbalance.

Sources from which cash flows arecoming or outgoing can be of three types. They are;

1. Operating cash flow: It indicatescash coming in or outgoing from normal operation of business. It isascertained by adjusting different items with net revenue.

2. Second source is cash flow frominvesting activities. It includes cash inflow and outflows fromlong term capital projects. It includes land, building, plant,machineries and many other capital items. When capital assets arepurchased cash will outflow. When some capital assets are sold cashwill inflow.

3. Last source is financingactivity. Issue of bond, stock etc will mean finance is injected inthe business. So it is cash inflow from financing activities. Thuswhen bond is repaid or stock is repurchased, cash is paid. So it isoutflow from financing activities.

Here, person is lending money. It is investment in debt capital. Long term investment indebt capital is a part of investing activity. When lending is madecash is paid. So lending is cash outflow from investing activities.Just opposite cash flow is observed when loans are colected. It iscollected on its maturity. On collection cash will inflow. Thus itis cash inflow from investing activity.

Issued the cheques in the month of April = 18500

Issued the cheques in the month of May = 25316

Value of the cheques payment met = (38612)

(21676 + 16936)

Value of outstanding checks in the month of May is RO5204