A review of Jerry's Canoe Gallery's statement of cash flows showed the following: $\begin{array}{lc}
\text { Cash flows from operating activities } & 75,000 \
\text { Cash flows from investing activities } & (135,000) \
\text { Cash flows from financing activities } & 125,000
\end{array}$From this information,the most likely explanation is that Jerry's is

Question

Quizplus · Accepted Answer

The positive cash flow from operating activities ($75,000) indicates that the company is generating cash from its core business operations. The negative cash flow from investing activities (-$135,000) suggests that the company is spending money on purchasing long-term assets. The positive cash flow from financing activities ($125,000) indicates that the company is raising cash through borrowing or issuing equity. Therefore, the most likely explanation is that Jerry's Canoe Gallery is using cash from operations and borrowing (financing activities) to purchase long-term assets.

A Review of Jerry's Canoe Gallery's Statement of Cash Flows