Cash Flows

Question 1

What is payment of interest classified as under US GAAP

Answer 1

Operating Activity

Question 2

What is payment of dividend classified as

Answer 2

Financing Activity

Question 3

What is payment to acquire stock classified of another company

Answer 3

Investing Activity

Question 4

Under IFRS payment of dividends may be classified as

Answer 4

Operating or Financing

Question 5

Interest paid and collected is

Answer 5

Operating Cash Flow

Question 6

Shares issued and dividends paid

Answer 6

Financing Cash Flow

Question 7

Cash Flow per share is

Answer 7

not allowed for GAAP - allowed for IFRS

Question 8

Paying Dividends and treasury stock transactions are

Answer 8

Financing

Question 9

Indirect M operating - increase current operating liabilities

Answer 9

add to net income

Question 10

Indirect M operating - decrease current assets

Answer 10

add to net income

Question 11

Indirect M operating - increase current assets

Answer 11

subtract net income

Question 12

Indirect M operating - decrease current operating liabilities

Answer 12

subtract net income

Question 13

Indirect M operating - non-cash losses and expenses included in net income

Answer 13

add to net income

Question 14

Indirect M operating - losses and expenses cash effects related to investing or financing

Answer 14

add to net income

Question 15

Indirect M operating - non-cash gains and revenues included in net income

Answer 15

subtract net income

Question 16

Indirect M operating - gains and revenues cash effects related to investing or financing

Answer 16

subtract net income

Question 17

Cash paid for income tax

Answer 17

Income tax expense + - tax payable + - tax deferred

Question 18

To reconcile cost of goods sold to cash paid to suppliers

Answer 18

1. determine purchases

2. determine cash paid for goods sold by adding the decrease in accounts payable to purchases.

Question 19

Equipment purchased with note payable

Answer 19

non cash financing and investing - disclosed outside statement of cash flows

Question 20

Net cash from operating actives calculated indirectly by

Answer 20

Removing from net income the effects of (1) all deferrals of past operating cash receipts and cash payments, (2) all accruals of expected future operating cash receipts and cash payments, (3) all financing and investing activities, and (4) all noncash operating transactions.

Question 21

Required disclosures for the cash flow statement

Answer 21

Information about all material investing and financing activities that affect recognized assets or liabilities but not cash flows must be disclosed.

Question 22

Cash collected from customers

Answer 22

Beginning accounts receivable
$XXX
Sales (accrual basis)
XXX
Ending accounts receivable
(XXX)
Cash collected from customers
$XXX

Question 23

Cash paid to suppliers

Answer 23

Beginning accounts payable
$XXX
Purchases (accrual basis)
XXX
Ending accounts payable
(XXX)
Cash paid to suppliers
$XXX

Question 24

Interest Paid

Answer 24

Beginning interest payable
$XXX
Interest expense (accrual basis)
XXX
Ending interest payable
(XXX)
Interest paid during the period
$XXX

Question 25

Expenses Paid

Answer 25

Ending prepaid expenses
$XXX
Current-period expense (accrual basis)
XXX
Beginning prepaid expenses
(XXX)
Expenses paid during the period
$XXX

Question 26

Indirect Method supplemental disclosure

Answer 26

Interest Paid/Taxes Paid

Question 27

Financing Activities - Cash Inflows

Answer 27

cash from issuing shares, loans, notes, and bonds

Question 28

Financing Activities - Inflows

Answer 28

repayment of cash borrowed, cash dividends, treasury stock, capital lease

Question 29

A/R turn over ratio

Answer 29

Net Credit Sales/ Average A/R Balance

Question 30

Tax Expense

Answer 30

Taxes Payable Beg. Bal. + Expense (provision for income tax) – End taxes payable bal.

Question 31

Cash equivalents

Answer 31

no effect on cash flow statement

Question 32

Amortization bond discount J/E

Answer 32

debit interest expense, credit discount - non-cash transaction reduces net income so added to operating cash flow

Question 33

Cash paid for COGS

Answer 33

The first step is to determine purchases by subtracting the decrease in inventory from cost of goods sold.

The second step is to determine cash paid for goods sold by subtracting the increase in trade accounts payable from purchases