Question

issued common stock of $15,000 and used the proceeds to pay off short-term debt. used $2,000 of cash to pay off short-term debt. purchased equipment for $10,000, paying 80% in cash and signing a six-month note payable for the remainder.

Answer 1

The Common Stock received credit for it. The company spent $9,000 on office equipment, of which $2,500 was paid in cash and the remaining $7,000 was put on a note payable.

One of the most important factors in a company' ability to survive is "cash flow." It may be either good or negative, which is obviously the worst case scenario. The chapter explores the idea of cash flow before demonstrating how the money may be put to use in the company. The chapter concludes with a discussion of externally created funds because funds can be generated externally in addition to internally.

principal monetary activities of the business and other pursuits not related to finance or investing. The movements in stocks, debtors, and creditors related to operating activities must be shown in the reconciliation between the operational profit stated in the profit and loss account and the net cash flow from operating activities.

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