Question

Q1. On the statement of cash flows, a positive amount indicates a cash (__________ / outflow), whereas a negative amount indicates a cash (inflow / __________).
Q2. Identify the following transactions as Operating, Investing, or Financing activities.
(_____/ I / F) a. Receive cash from customers
(O / _____/ F) b. Purchase property, plant, and equipment
(_____/ I / F) c. Pay employee wages
(O / I / ____) d. Issue common stock
(_____/ I / F) e. Pay suppliers
(O / I / ___) f. Pay back long-term debt
Q3. Refer to the cash flow information displayed below to answer the following questions.
a. For Southwest Airlines, the primary source of cash is (__________/ investing / financing) activities, which is considered (__________/ unfavorable / depends).
For an established company, the expected primary source of cash is (__________/ investing / financing) activities. Southwest Airlines is a(n) (young / __________) company.
b. The purchase and sale of long-term assets are reported as (operating / __________/ financing) activities, which for this company is a cash (inflow / __________). This company is (__________/ selling) long-term assets, which is considered (__________/ unfavorable / depends).
c. Borrowing funds, issuing stock, and paying dividends are reported as (operating / investing / __________) activities.
During 2009, borrowing and repaying debt are the primary financing activities. During 2009, financing activities report a net cash (__________/ outflow), indicating this company (__________/ paid off) more long-term debt.
During 2011, issuing and repurchasing common stock are the primary financing activities. During 2011, financing activities report a net cash (inflow / __________), indicating this company (issued / __________) more common stock.
d. For operating activities, a net cash (__________/ outflow / depends) is preferred. Why?
For investing activities, a net cash (inflow / __________/ depends) is preferred. Why?
Purchasing PPE and other income-producing assets indicates the organization is growing and expanding.
For financing activities, a net cash (inflow / outflow / __________) is preferred. Why?


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  • CreatedSeptember 17, 2015
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