Warner Limited classifies interest paid and interest received a operating activities. Warner Limited had the following cash flows during a reporting period:
Consideration paid to acquire a subsidiary, net of cash acquired $250 000
Dividends paid $65 000
Repayment of borrowings $90 000
Interest paid on borrowings $57 000
Proceeds from sale of plant $215 000
What is the amount of the cash flows in relation to financing activities of Warner Limited for the reporting period?
A) Net cash inflow $155 000.
B) Net cash outflow $155 000.
C) Net cash inflow $212 000.
D) Net cash outflow $212 000.

Question

Quizplus · Accepted Answer

The cash flows related to financing activities are the consideration paid to acquire a subsidiary, net of cash acquired, the dividends paid, the repayment of borrowings, and the interest paid on borrowings. The net cash outflow from these activities is ($250,000 + $65,000 + $90,000 + $57,000) = $462,000. The proceeds from the sale of plant is a cash flow related to investing activities.

Warner Limited Classifies Interest Paid and Interest Received a Operating