Cash Flow Statement

Question 1

What IFRS rule dictates that a company must provide a statement of cash flows?

Answer 1

IAS 7

Question 2

What 3 headings must the cash flow statement be broken into?

Answer 2

Investing
Financing
Opearting

IFO

Question 3

What does the statement of cash flow show?

Answer 3

The net incrase or decrease in cash over the period.

Also allows a reader to see how cash is generated and how it is used.

Question 4

What cash flows are included under the operating activities heading?

Answer 4

Cash which is generated or consumed by the main revenue producing activities.

Question 5

What cash flows are included under the investing activities heading?

Answer 5

Inflows from the disposal and outflows from the purchase of long term assets.

Question 6

What cash flows are included under the financing activities heading?

Answer 6

Includes:
1) Cash spent on Dividends & Interest
2) Cash raised from issuing shares & borrowing
3) Less cash spent repaying debt & buying back shares.

Question 7

What two ways can the statement of cash flow be presented?

Answer 7

With the Direct Method or the Indirect Method

Question 8

What is the difference between the Direct Method and the Indirect Method?