16. Statements of Cash Flows Flashcards
What items may cause the profit for the year to differ from the cash flow?
Depreciation, sales on credit etc
What are cash equivalents?
Short term, highly liquid investments, readily convertible to cash
What are operating activities?
Principle revenue producing activities
What are investing activities?
Acquisition and disposal of non current assets and other investments not included in cash equivalents
What are financing activities?
Those which result in changes in the size and composition of the equity capital and borrowings
What is the indirect method of showing the statement of cash flows?
Net profit or loss is adjusted for changes in working capital and non cash items
What are the three categories for changes shown in an indirect statement of cash flows?
Cash flows from operating activities, from investing activities and from financing activities
What is contained in cash flows from operating activities between profit before tax and operating profit before working capital adjustments?
Depreciation +
Profit/Loss on disposal -/+
Investment income -
Interest expense +
(bottom two moved lower down the statement)
What is contained in cash flows from operating activities between operating profit and net cash from operating activities?
Increase/decrease in receivables -/+
Increase/decrease in inventories -/+
Increase/decrease in payables +/-
Interest paid -
Income tax paid -
What is contained in the cash flows from investing activities?
Purchase of NCA -
Proceeds from sale of equipment +
Interest received +
Dividends received +
What is contained in the cash flows from financing activities?
Proceeds from issued share capital +
Proceeds from long term borrowings +
Dividends paid -
What are the four pieces of information on a NCA shown on the statement of cash flows?
Depreciation +
Profit/Loss on disposal -/+
Cost of new asset -
Proceeds from sale of asset +
Which section does the direct method take a different approach to when forming the statement of cash flows?
Cash flows from operating activities
What is the calculation for cash generated from operations in the direct method?
Cash receipts from customers - cash paid to suppliers and employees
