During the year, Penso Ltd received $50 000 from its customers, $5 000 for the sale of a motor vehicle and $20 000 for the issue of shares. It paid $27 000 to suppliers and employees, $3 000 for income tax and $50 000 for new machinery. In addition, it paid out $12 000 to redeem bonds. Its cash balance at the commencement of the year was $22 000. What were the cash flows from investing activities?

Question

Quizplus · Accepted Answer

Cash flows from investing activities include the purchase of long-term assets and investments not related to the core operations of the business. Here, the cash outflow for new machinery ($50,000) and the cash inflow from the sale of a motor vehicle ($5,000) are considered investing activities. Therefore, the net cash flow from investing activities is -$45,000 ($5,000 - $50,000).

During the Year, Penso Ltd Received $50 000 from Its