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27.07.2022 - 14:33

Identify one example of cash flow for each type of activity (operating, investing, and financing) of a restaurant business. Briefly justify the choices and state whether they are inflows or outflows.

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Identify one example of cash flow for each type of activity (operating, investing, and financing) of a restaurant business. Briefly justify the choices and state whether they are inflows or outflows.

Answers (1)

Melba April 12, 2023 в 10:02

Operating activity: An example of cash inflow for operating activity in a restaurant business would be revenue generated from the sales of food and beverages. This is because revenue from sales is the primary source of cash inflow for any restaurant business. Cash outflows for operating activity could include payment of salaries, utilities bills, and inventory costs. Investing activity: An example of cash outflow for investing activity in a restaurant business could include the purchase of new equipment such as an oven or refrigerator. This is because any investment made in the restaurant's equipment would require a significant amount of cash outflow. On the other hand, an example of cash inflow for investing activity could include the sale of a property owned by the restaurant. Financing activity: An example of cash inflow for financing activity in a restaurant business could include taking a loan from a bank or any financial institution. This would be considered as cash inflow because the restaurant is receiving cash from an external source to finance its business operations. An example of cash outflow for financing activity could include paying off debts, such as repaying loans or interest payments.

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