What is a cash flow statement? Why it is important for a business? ( 5 marks)

Q2

Explain the following terms;

a. Negative cash flow

b. Positive cash flow (2 marks)

Q3

Describe the three sections of a cash flow statement with an example of each (12 marks)

Q4

The following information was taken from the financial records of the XYZ Company.

Beginning of Year End of the year Change

Cash $ 23,500 $ 37,400 (13,900)

Accounts receivable (net) m 84,500 80,350 4,150

Inventories 100,200 94,300 5,900

Prepaid expenses 4,970 5,300 (330)

Accounts payable (creditors) 71,400 68,900 2,500

Salaries Payable 5,320 6,450 (1,130)

Net Income reported on the income statement for the current year was $134,800. Depreciation expense recorded on buildings and equipment was $27,400 for the year.

Required: Using the indirect method prepare the Cash Flows from Operating Activities section of the Statement of Cash Flows.