Cash Flows

Question 1

Cash Flows from Investing

Answer 1

Involves Non-current assets such as:
making and collecting loans
acquiring/disposing of investments & PPE
proceeds from the sale of non-current assets
pmt for the purchase of non-current assets

Question 2

Cash Flows from Operating

Answer 2

Cash collection from customers
Cash pymts to suppliers
cash pmt for operating expenses
interest pymts
tax pmts

Question 3

Cash Flows from Financing

Answer 3

Involves noncurrent liabilities and equity:
Proceeds from Borrowings
Repymts of Debt
Proceeds from issuing stock
pymt for repurchase of stock
dividends paid

Question 4

Non-Cash Investing and Financing activities

Answer 4

Coverting debt to equity
Acquiring assets thru direct liabilities
Acquiring an asset through a finance lease
Exchanging non-cash assets or liabilities for other non-cash assets or limbs

Question 5

Direct Method v Indirect method

Answer 5

Direct Method: requires a sep schedule to reconcile net income with net cash flow from operating activities
Indirect method: disclosures should contain amounts of interest paid and income tax paid

Question 6

Classification of interest and dividend

Answer 6

Interest Paid: Operating
Dividend Paid: Financing
Interest Rec’d: Operating
Dividend Rec’d: Operating