Cash flow statement

Question 1

Cash flow statement

Answer 1

An accounting report which summaries all cash inflows and cash outflow into a financial bank balance for a reporting period, assessing the firms ability to manage cash.
Purpose: Determine the final bank balance at the end of the reporting period.

Question 2

Operating activities

Answer 2

Cash inflows and cash outflows relating to the firms day-to-day trading activities.

Question 3

Investing activities

Answer 3

Cash inflows and cash outflows relating to buying and selling non-current assets on cash.

Question 4

Financing activities

Answer 4

Cash inflows and cash outflows relating to any changes in the firms financial structure.

Question 5

The cash flow statement can be used to:

Answer 5

• Identify trends in different activities in comparison to different periods.
• Compare performance against targets.
• Help plan and predict future reporting periods.
• Calculate financial indicators.

Question 6

Cash, Profit

Answer 6

Cash - Money a business has on hand.

Profit - the difference between revenue and expenses.

Question 7

Cash item not impacting profit

Profit item not affecting cash

Answer 7

Cash item not impacting profit - GST received, drawings.

Profit item not affecting cash - Inventory gain, depreciation.