Quick Question on Indirect Method of Accounting?

Question

I'm having problems with the overall steps to answering an adjustment using the Indirect Method of accounting.

I understand that Operating functions of a business, A/R, A/P, INV, Prepaid rent, Income payable/Interest Payble, Wage Payable etc all have to be adjusted after finding the change. EX. An increase from year 1-2 of 3,000 would mean a decrease of 3,000 on the adjustment.

However What i'm trying to figure out here is deciding where the given information fits into the adjustment.

EX// I was given, "Dividends of 7,000 were declared/paid, New plant assets purchased for 195,000 in cash. Land was also purchased for cash. Plant assets were sold for 25,000 cash. Additional stock was issued for cash, and a portion of the bank loan was repaid.

Now* Dividends would be a form of Financing activity = -7000, -195,000 cash for purchase of asset (investing?), now for the unnamed amounts would you just look at the Balance sheet?

Thanks for any help.

Answer 1

Dividends paid is an outflow under financing activities.
Purchase of new plant/land is an outflow under investing activities.
Proceeds from plant sold is an inflow under investing activities.
Proceeds from Issue of stock is an inflow under financing activities.
Bank loan repaid is an outflow under financing activities.

Click on the link provided for the FRS 7 Cash Flow Statements, and scroll to almost the end where you'll see an illustration of the Indirect Method Cash Flow Statement. The items in your question can be found in this illustration.