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CPA Exam - FAR > 1B Statement of Cash Flows > Flashcards

1B Statement of Cash Flows Flashcards

1
Q

3 Sections of a Statement of Cash Flows

A

Cash Flows

  1. Operating Activities
  2. Investing Activities
  3. Financing Activities
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2
Q

Operating Activities Inflows

  1. Cash Receipts from Customers
  2. Interest Received
  3. ???
A

Dividends Received

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3
Q

Operating Activities Inflows

  1. Cash Receipts from Customers
    2 ???????
  2. Dividends Received`
A

Interest Received

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4
Q

Operating Activities Inflows

  1. ?????
  2. Interest Received
  3. Dividends Received
A

Cash Receipts from Customers

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5
Q

Operating Activities Outflows

  1. Income Taxes Paid
  2. Interest Paid
  3. ????????
A

Cash payments to employees/venders

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6
Q

Operating Activities Outflows

  1. ????
  2. Interest Paid
  3. Cash Payments to employees/vendors
A

Income taxes paid

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7
Q

Operating Activities Outflows

  1. Income Taxes Paid
  2. ????
  3. Cash Payments to employees/vendors
A

Interest Paid

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8
Q

What kind of transactions go in Investing Activities of CFS??

  1. ?????
  2. lending cash
  3. receiving payment on loans
A

buy or sell long-term assets and investments for cash

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9
Q

What kind of transactions go in Investing Activities of CFS??

  1. buy or sell long-term assets and investments for cash
  2. ???????
  3. receiving payment on loans
A

lending cash

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10
Q

What kind of transactions go in Investing Activities of CFS??

  1. buy or sell long-term assets and investments for cash
  2. lending cash
  3. ?????
A

receiving payment on loans

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11
Q

Investing Activities Outflows

  1. Purchase of PPE
  2. Purchasing Equity Securities
  3. ?????
A

Loans made by company (lending out cash)`

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12
Q

Investing Activities Outflows

  1. Purchase of PPE
  2. ?????
  3. Loans made by company (lending out cash)
A

Purchasing Equity Securities

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13
Q

Investing Activities Outflows

  1. ?????
  2. Purchasing Equity Securities
  3. Loans made by company (lending out cash)
A

Purchase of PPE

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14
Q

Investing Activities Inflows

  1. Sale of PPE
  2. Sale of equity securities
  3. ?????`
A

Receive loan payments (For money you lent out)

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15
Q

Investing Activities Inflows

  1. Sale of PPE
  2. ?????
  3. Receive loan payments (for the money you lent out)
A

Sale of equity securities

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16
Q

Investing Activities Inflows

  1. ????
  2. Sale of equity securities
  3. Receive loan payments (for the money you lent out)
A

Sale of PPE

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17
Q

What are Financing activities???

A

Transactions involving external sources of funding

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18
Q

Financing Activities Inflows

  1. Cash Receipts from issuing stock
  2. Cash receipts from issuing bonds, notes, mortgages
  3. ??????
A

Sale of treasury stock

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19
Q

Financing Activities Inflows

  1. Cash Receipts from issuing stock
  2. ???????
  3. Sale of treasury stock
A

Cash receipts from issuing bonds, notes, mortgages

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20
Q

Financing Activities Inflows

  1. ?????
  2. Cash receipts from issuing bonds, notes, mortgages
  3. Sale of treasury stock
A

Cash Receipts from issuing stock

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21
Q

Financing Activities Outflows

  1. Payment of Dividends
  2. ?????
A

Payment of Bonds, notes etc. (The principal not the interest)

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22
Q

Financing Activities Outflows

  1. ??????
  2. Payment of Bonds, notes etc. (The principal not the interest)
A

Payment of Dividends

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23
Q

Direct Method Statement of Cash Flows

A

List inflows and outflows and get the net amount of the two

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24
Q

Indirect Statement of Cash Flows

A

Starts with net income then make adjustments to eliminate non cash transactions

25
Q

Direct Method Examples

A 
Cash collected from customers
Interest income
Dividends received
Interest paid
Cash paid to vendors
Income Tax paid
Wages paid
26
Q

Dividends Paid - What Section of Statement of Cash Flows?

A

Operating Activities

27
Q

Dividends Received - What Section of Statement of Cash Flows?

A

Financing Activities`

28
Q

Interest Income/interest Paid - What Section of Statement of Cash Flows?

A

Operating Activities

29
Q

How to Treat change in A/R using Indirect method

A

Subtract Change in A/R

Increase in A/R decreases net income

Decrease in A/R = Increase in net income ( double negative makes possitive)

30
Q

Gains (indirect method)

A

Subtract gains from net income

31
Q

Change in Prepaid Expenses (Indirect Method)

A

Subtract change in prepaid expenses from net income

32
Q

Change in Inventory ( Indirect Method)

A

Subtract change in inventory from net income

33
Q

Amortization of Bond Premium (Indirect Method)

A

Subtract Amortization of Bond Premium from net income

34
Q

Losses (indirect method)

A

Add losses to net income

35
Q

Depreciation Expense - Indirect method

A

Add depreciation expense to net income

36
Q

Changes in A/P (Indirect Method)

A

Add changes in A/P to Net income

37
Q

Amortization of Bond Discount (Indirect Method)

A

Add amortization of bond discount to net income

38
Q

Note Payable (Indirect Method)

A

Increase/Decrease in Note Payable not included because it’s a financing activity

39
Q

Dividends Paid (Indirect Method)

A

Not included (it’s a financing activity)`

40
Q

Finding Cash Payments (CFS)

Start With COGS
+ Change in inventory
???

A

Subtract Change in A/P

41
Q

Finding Cash Payments (CFS)

Start With COGS
???
- Change in A/P

A

Add Change in inventory

42
Q

Finding Cash Payments (CFS)

?????
+ Change in inventory
-Change in A/P

A

Start With COGS

43
Q

How to Determine Cash Collected from A/R (CFS)

A

Sales Revenue + Change in A/R

44
Q

Amortization of Bond Discount/Premium Effect on Net income (Indirect Method)

A

Amortization of Bond Discount = an addition to net income

Amortization of Bond Premium = a deduction from net income

45
Q

Purchase of a Treasury Bill Effect on Cash Flows

A

No effect because it’s a cash equivalent.

46
Q

Do Cash Equivalents Effect Cash Flow Statement

A

No, they have no effect

47
Q

Does Commercial Paper Effect Cash Flow Statement

A

No effect because it’s a cash equivalent.

48
Q

Do Money Markets Effect Cash Flow Statament

A

No effect because it’s a cash equivalent.

49
Q

How is Cash Flow Per Share Disclosed in Statement of Cash Flows?

A

Not disclosed in the Statement of Cash Flows

50
Q

Which of theses is a required disclosure in Statement of Cash Flows

Amount of Taxes Paid?

Amount of interest Paid?

A

Both are required disclosures regardless of method (direct or indirect)`

51
Q

How are

Amount of taxes paid &

Amount of interest paid

Disclosed when using Indirect Method for Statement of Cash Flows

A

These items are to be disclosed as supplemental disclosures in the statement of cash flows

52
Q

Working Capital

A

Current Assets-Current Liabilities

53
Q

Cash Paid for Income taxes

  • ????
  • Change in Income Taxes Payable
  • Change in Deferred income Taxes
A

Income Tax Expense

54
Q

Cash Paid for Income Taxes

  • Income Tax Expense
  • ????
  • Change in Deferred income Taxes
A

Subtract change in income taxes payable

55
Q

Cash Paid for Income Taxes

  • Income Tax Expense
  • Change in Income Taxes Payable
  • ?????
A

Subtract Change in Deferred income Taxes

56
Q

Earliest to Classify as Discontinued Operations

A

When it is classified as held for sale

57
Q

Determine Gain on Disposal of Segment

A
  • Gain on the sale minus the losses during the fiscal year.

- This will give you the gain before taxes

58
Q

Period to Record Loss on Disposal of Segment

A

Record loss when it is estimated

This is if the process crosses over two periods, which period is the loss recorded?

So, ex: you decide to dispose a division’s assets on Oct 1, yr 3 and estimate that there’s going to be a $25,000 in Feb yr 4 because that’s when you estimate, you sell it.

59
Q

If Segment is Classified as Held for sale during the year (ex: September) how do you calculate Gain/Loss from disposal?

A

Take operating gain/loss from Jan to September

Take gain/loss after September to end of December

Net the two and use gain/loss from sale of segment to find gain/loss

CPA Exam - FAR (8 decks)

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