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ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)

During the year Orion Co received $12,000 interest on investments and $5,000 dividends from an investment in equity shares, and sold investments for $40,000 cash. It bought investments for $25,000 cash. Assuming Orion classifies interest and dividends received as investing activities, what is the net cash flow from investing activities from these items?

Net investing cash inflow is $32,000: sale proceeds of $40,000, interest of $12,000 and dividends of $5,000 total $57,000, less the $25,000 paid to buy investments. Interest and dividends received are included because Orion classifies them as investing.

  1. A$32,000Correct
  2. B$15,000
  3. C$27,000
  4. D$22,000

Explanation

Inflows: 40,000 sale + 12,000 interest + 5,000 dividends = 57,000. Outflow: 25,000 purchase. Net = 32,000. Omitting the interest and dividends gives 15,000.

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