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29 November, 00:06

During the year, Next Tec Corp. had the following cash flows: receipt from customers, $10,000; receipt from the bank for long-term borrowing, $6,000; payment to suppliers, $5,000; payment of dividends, $1,000; payment to workers, $2,000; and payment for machinery, $8,000. What amount would be reported for net financing cash flows in the statement of cash flows?

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  1. 29 November, 00:54
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    The net financing cash flows is $5000 as shown below.

    Explanation:

    The net financing cash flows is calculated below:

    Receipt from bank for long-term borrowing $6000

    Payment of dividends ($1000)

    Net financing cash flows $5000

    Receipt of $10000 relates to operating cash flows as it is cash receipt in the ordinary course of business

    Payment to suppliers of $5000 is an operating cash flow as well as suppliers are paid for supplying the items that the business deals in, same applies to payment to workers of $2000.

    Lastly, the payment for machinery of $8000 relates to investing activities of the business as it an expenditure incurred to generate more returns.
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