Tropical Splendor's statement of cash flows showed the following totals:
Cash provided/(used) by operating activities $ 54,000
Cash provided/(used) by financing activities 21,100
Cash provided/(used) by investing activities (49,000)
Which statement most likely explains what occurred during the year?

Question

Quizplus · Accepted Answer

Tropical Splendor has positive cash flow from operating activities ($54,000) and financing activities ($21,100), but negative cash flow from investing activities (-$49,000). This suggests the company is generating cash from its operations and borrowing (financing activities), and it is using this cash to invest in long-term assets (negative cash flow from investing activities).

Tropical Splendor's Statement of Cash Flows Showed the Following Totals