Use the following information for questions.
Oswald Ltd.has recently decided to go public and has hired you as their independent accountant.They wish to adhere to IFRS and know that they must prepare a statement of cash flows.Their financial statements for 2017 and 2016 are provided below: The following additional data were provided for calendar 2017:
-On a statement of cash flows for calendar 2017, the cash provided by (used in)by financing activities is
A)$6,000.
B)$24,000.
C)$(54,000).
D)$(30,000).

Question

Use the following information for questions.
Oswald Ltd.has recently decided to go public and has hired you as their independent accountant.They wish to adhere to IFRS and know that they must prepare a statement of cash flows.Their financial statements for 2017 and 2016 are provided below:  The following additional data were provided for calendar 2017:
-On a statement of cash flows for calendar 2017, the cash provided by (used in)by financing activities is
A)$6,000. 
B)$24,000. 
C)$(54,000). 
D)$(30,000).

Quizplus · Accepted Answer

The cash provided by (used in) by financing activities is calculated by adding up the cash inflows and outflows related to financing activities during the period.

From the statements provided, we can see that in 2017, Oswald Ltd. issued 4,000 shares for $80,000 and paid dividends of $40,000. This results in a net cash outflow of $40,000 (i.e. $80,000 - $40,000) from financing activities.

Additionally, the company also repaid a long-term loan of $14,000 during the year which also constitutes a cash outflow from financing activities.

Therefore, the total cash used in financing activities during 2017 is $54,000 (i.e. $40,000 + $14,000), and the correct answer is C.

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