Ch16 - Cashflow

Question 1

Investing Activities

Answer 1

Purchase of assets (X)
Sale proceeds of assets X
Investment income (X)

Question 2

Financing Activities

Answer 2

Share issue X
Loan note cancellation (X)
Loan repaid or received (X)/X
Lease repaid (X)
Dividends paid (X)

Question 3

Operating Activities

Answer 3

Profit before tax X
Adjustments for:
Finance costs X - SOPL
Investment income (X) - SOPL
Depreciation X
Profit/loss on sale of non-current assets (X)/X -
Provisions increase/decrease X/(X)
Government grant amortisation (X)
Increase/decrease in accruals X/(X)
Increase/decrease in prepayments (X)/X

Operating profit before working capital changes X
Increase/decrease in inventories (X)/X
Increase/decrease in trade receivables (X)/X
Increase/decrease in trade payables X/(X)

Cash generated from operations X
Less: tax paid (X)
Less: Interest paid (X)

Question 4

Deferred Income T Account

Answer 4

B/F on right hand side, receipt of grant will be credit (Dr Bank Cr Deferred Income)

If there is a release of grant income this is Dr Deferred Income, C/F on debit side