Required: (a) Prepare Vanguard low Statement for the year ended 31 December 2019 with the following classifications using the direct method: (i) Cash flows from operations; (ii) Cash flows from investing activities; (iii) Cash flows from financing activities. (b) Discuss the importance of analysing the cash flow statement. (c) Explain why it is possible to have a negative cash flow from operations but a positive net income. Give an example of such a scenario.
Required: (a) Prepare Vanguard low Statement for the year ended 31 December 2019 with the following classifications using the direct method: (i) Cash flows from operations; (ii) Cash flows from investing activities; (iii) Cash flows from financing activities. (b) Discuss the importance of analysing the cash flow statement. (c) Explain why it is possible to have a negative cash flow from operations but a positive net income. Give an example of such a scenario.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter11: The Statement Of Cash Flows
Section: Chapter Questions
Problem 41E: Determining Cash Flows from Investing Activities Burns Companys 2019 and 2018 balance sheets...
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(a) Prepare Vanguard low Statement for the year ended 31 December 2019 with the following classifications using the direct method:
(i) Cash flows from operations;
(ii) Cash flows from investing activities;
(iii) Cash flows from financing activities.
(b) Discuss the importance of analysing the cash flow statement.
(c) Explain why it is possible to have a negative cash flow from operations but a positive net income. Give an example of such a scenario.
Transcribed Image Text:The cash flow data of Vanguard Bhd. for the year ended 31 December 2019 is as follows:
RM
Cash payment of dividends
(50,050)
(20,020)
(14,300)
(64,350)
54,340
(35,750)
(42,900)
(121,550)
357,500
Purchase of land
Cash payment of interest
Cash payment of salaries
Sale of equipment
Share buyback
Purchase of equipment
Cash payment to suppliers
Cash collections from customers
Cash balance as at 1st January 2019
71,500
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