Unformatted text preview: e included in operating activities only to adjust Net Income. The balance
of the transaction would not be included on the statement of cash flows because it does not affect
cash. As proof, the entry for this event would be:
Accumulated Depreciation: Building (+A)
Exchanged a building for land. 14. XX Financing activity 15. XX
XX Operating activity E14–3
AAA Cash Provided (Used) by
(1 7 8 ) Financing
$ (1 8 0 ) Net Increase
(D e c r e a s e )
$ (38) BBB
290 (4 5 0 )
(4 1 4 )
(1 3 0 )
(1 2 0 ) 190
(1 0 0 ) (4 1 )
(1 3 7 )
This company appears to be following a policy of maintaining a relatively constant cash balance. The
company also appears to be relying primarily on operating activities to provide cash to finance the
acquisition of nonoperating assets and to finance the repayment of debt and/or acquisition of treasury
Similar to AAA, this company appears to be following a policy of maintaining a relatively constant cash
balance. This company also appears to be using cash from operating activities and from borrowings to
purchase nonoperating assets.
CCC appears to be using large amounts of cash generated in both the current and prior periods to acquire
nonoperating assets. This company also appears to disdain borrowing money.
DDD appears to be following a policy of acquiring large amounts of cash in the current period. The
company acquired this cash primarily through borrowings.
EEE appears to be acquiring moderate amounts of cash in the current period through operating activities.
Similar to Company AAA, Company EEE used some of this cash to acquire nonoperating assets and to
repay existing debts and/or to acquire treasury stock. E14–4
Kraft Foods – Cash from Investments ($1,239): the company was able to generate cash from operations
and used most of this increase in cash to repay debt, pay dividends, and/or repurchase equity. The
company also used cash to purchase longterm assets.
Kellogg’s – Net Change in Cash $79: the company was able to gene...
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