Chapter 6

Question 1

Basis for preparing statement of cash flows?

Answer 1

Cash basis.

Question 2

Difference between profit and cash?

Answer 2

Timing difference in profit between the profit that a business makes and the cash it actually receives and pays out.

Question 3

Methods for reconciling the net cash from operating activities? (2)

Answer 3

1 indirect method
2 direct method

Question 4

Interest and tax equation?

Answer 4

Amount paid = balance at start of year + charge for this year - balance at end of year

Question 5

Sections of cash flow statement? (3)

Answer 5

1 Operating activities
2 Investing activities
3 Financing activities.