Answer and Explanation:
The Preparation of the statement of cash flows is shown below:-
                                        <u>Ernst Consulting</u>
                                     <u>Statement of cash flows</u>
                                 <u>For the year ended Oct 31</u>
<u>Particulars                                                     Amount</u>
Cash flow from operating activities
 Cash paid for salaries                  -$2,160
 ($7,350 - $5,190)
Cash paid for rent                        -$3,910  
Paid cash for telephone 
expense                                         -$790  
Paid cash for miscellaneous
expense                                        -$610  
Net cash flow from operating activities          -$7,470
Cash flow from investing activities
Purchase of equipment              -$18,310
Net cash flow from investing activities             -$18,310
Cash flow from financing activities
dividend paid                                 -$2340
Initial investment in Cash              $38,320  
Net cash flow from financing activities             $35,980
Net cash increase/decrease                                $10,200
Beginning Cash                                                      0
Ending Cash                                                           $10,200
Therefore we indicate the minus sign for cash outflow while the positive amount shows cash inflow.