16. Statement of cash flows Flashcards by Stephen Moule | Brainscape

Q

What is IAS 7?

A

Statement of cash flows

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Q

What is the first objective of IAS 7: Statement of cashflows?

A

To ensure all entities provide information about historical changes in cash and cash equivalents by means of a statement of cashflows.

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Q

What is the second objective of IAS 7: Statement of cashflows

A

The classify cashflows during the period between those arising from…

Operating activities
Investing activities
Financing activities

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Q

What is an advantage of a statement of cashflows over the profit figure in the P+L?

A

It is easier to understand and more difficult to manipulate

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Q

What is the definition of cash?

A

Cash on hand (including overdrafts) and on demand deposits

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Q

What is the definition of cash equivalents? 3

A

Short-term, highly liquid investments
That are readily convertible to known amounts of cash and;
Are subject to an insignificant risk of changes in value

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Q

What is the adjustment cash generated from operations for…

Finance cost

A

Add back

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Q

What is the adjustment cash generated from operations for…

Investment income

A

Deduct

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Q

What is the adjustment cash generated from operations for…

Depreciation

A

Add back

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Q

What is the adjustment cash generated from operations for…

Profit from sale of NCA?

A

Deduct

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Q

What is the adjustment cash generated from operations for…

Loss from sale of NCA?

A

Add back

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Q

What is the adjustment cash generated from operations for…

Provisions increase

A

Add back

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Q

What is the adjustment cash generated from operations for…

Provisions decrease

A

Deduct

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Q

What is the adjustment cash generated from operations for…

Government grant amortisation

A

Deduct

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Q

What is the adjustment cash generated from operations for…

Increase in prepayments

A

Deduct

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Q

What is the adjustment cash generated from operations for…

Decrease in prepayments

A

Add back

Q

What is the adjustment cash generated from operations for…

Increase in accruals

A

Add back

Q

What is the adjustment cash generated from operations for…

Decrease in accruals

A

Deduct

Q

What is the adjustment cash generated from operations for…

Increase in inventories?

A

Deduct

Q

What is the adjustment cash generated from operations for…

Decrease in inventories?

A

Add back

Q

What is the adjustment cash generated from operations for…

Increase in receivables?

A

Deduct

Q

What is the adjustment cash generated from operations for…

Decrease in receivables?

A

Add back

Q

What is the adjustment cash generated from operations for…

Increase in payables?

A

Add back

Q

What is the adjustment cash generated from operations for…

Decrease in receivables?

A

Deduct

Q

What are the four sections of the statement of cashflows?

A

Cash flow from operating activities
Cash flows from investing activities
Cash flow from financing activities
Analysis of cash and cash equivalents

Q

What goes in the cash flows from operating activities section of the proforma?

A

Cash generated from operations
Less: Interest paid
Less Tax paid

Net cash from operating activities

Q

What goes in the Cash flow from investing activities section of the proforma?

A

Less: Purchases of PPE
Proceeds from sale of PPE
Proceeds from government grants
Interest received
Dividends received

Net cashflow from investing activities

Q

What goes in the cash flow from financing activities section of the pro forma?

A

Proceeds from issue of shares
Proceeds from long-term borrowings
Less: Payments of lease liabilities
Less: Dividends paid

Net cash used in financing activities

Net increase/decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Total

Q

What goes in analysis of cash and cash equivalents section of the proforma?

A

A section for this year and last year

Cash on hand and balances with banks
Short-term investments

Cash and cash equivalents

Q

Page 379

403

A

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