14 xx financingactivity 15 xx xx operatingactivity

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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: Land (+A) Accumulated Depreciation: Building (+A) Building (–A) Exchanged a building for land. 14. XX Financing activity 15. XX XX Operating activity E14–3 Company AAA Cash Provided (Used) by Operations Investments 320 (1 7 8 ) Financing $ (1 8 0 ) Net Increase (D e c r e a s e ) $ (38) BBB CCC DDD EEE 219 197 120 290 (4 5 0 ) (4 1 4 ) (1 3 0 ) (1 2 0 ) 190 80 430 (1 0 0 ) (4 1 ) (1 3 7 ) 420 70 AAA 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 stock. BBB 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 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 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 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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