Warner Limited had the following cash flows during a reporting period:
$\bullet$Acquisition of subsidiary, net of cash flows: €250 000
$\bullet$Dividends paid: €65 000
$\bullet$Repayment of borrowings: €90 000
$\bullet$Interest paid on borrowings: €57 000
$\bullet$Proceeds from disposal of plant: €215 000
What is the amount of the cash flows from financing activities of Warner Limited for the reporting period?
A) Net cash inflow €155 000;
B) Net cash outflow €155 000;
C) Net cash inflow €212 000;
D) Net cash outflow €212 000.

Question

Warner Limited had the following cash flows during a reporting period: 
$\bullet$Acquisition of subsidiary, net of cash flows: €250 000
$\bullet$Dividends paid: €65 000
$\bullet$Repayment of borrowings: €90 000
$\bullet$Interest paid on borrowings: €57 000
$\bullet$Proceeds from disposal of plant: €215 000
What is the amount of the cash flows from financing activities of Warner Limited for the reporting period?
A) Net cash inflow €155 000;
B) Net cash outflow €155 000;
C) Net cash inflow €212 000;
D) Net cash outflow €212 000.

Quizplus · Accepted Answer

The cash outflows from financing activities are the repayment of borrowings (€90 000) and interest paid on borrowings (€57 000), which total €147 000. The cash inflows from financing activities are only dividends paid (€65 000), which results in a net cash outflow of €82 000. Adding the proceeds from disposal of plant (€215 000) does not change the cash flow classification as it is a cash inflow from investing activities, not financing activities. Therefore, the correct answer is B, net cash outflow of €155 000.

Warner Limited Had the Following Cash Flows During a Reporting ∙\bullet∙

Warner Limited Had the Following Cash Flows During a Reporting $\bullet$