Ch16 - Cashflow

Question 1

Financing Activities

Answer 1

Share issue X - Equity B/F to C/F (bal)
Loan note cancellation (X) - Movement on the SoFP between years
Loan repaid or received (X)/X
Lease repaid (X) - Lease Liability B/F to CF (bal) (current and non-current)
Dividends paid (X) - Retained Earnings, Profit for the year (bal)

Question 2

Investing Activities

Answer 2

Purchase of assets (X) - PPE B/F to C/F
Sale proceeds of assets X - sale value
Investment income X - Interest receivable B/F to C/F
Development costs (X) - B/F, Amortisation C/F
Government Grant Income - Deferred Income B/F (Cr side)

Question 3

Operating Activities

Answer 3

Profit before tax X
Adjustments for:
Finance costs X - SOPL
Investment income (X) - SOPL
Depreciation X - Given
Profit/loss on sale of non-current assets (X)/X - (sale - CV)
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

Question 5

Tax Working

Answer 5

Tax B/F (current and deferred)
Tax per SoPL
Deferred tax on revaluations
Tax paid - BAL
Tax C/F (Current and deferred)

Question 6

Cash and Cash Equivalents

Answer 6

Bank Overdraft
Cash in hand
Cash in bank

Question 7

Accruals including Interest

Answer 7

Minus off the interest from the B/F and C/F