ACCA FA · Chapter 12 · Question 10 of 10
A company has the following cash flows for a year: Net cash from operating activities $58,000 Net cash used in investing activities $71,000 Net cash from financing activities $20,000 At the start of the year, the company had an overdraft of $4,000 and no other cash or cash equivalents. What is the closing balance of cash and cash equivalents?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Positive balance of $3,000
Explanation
Net increase in cash = $58,000 - $71,000 + $20,000 = $7,000. Closing balance = opening -$4,000 + $7,000 = $3,000 positive. Treating the opening overdraft as a positive balance gives $11,000, and $7,000 is only the movement for the year.
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