F7-Cash Flow Flashcards
What items are included in OPERATING Activities on the Statement of Cash Flows?
Cash received from Customers- Interest & Dividends- Trading Securities
Cash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities
What items are included in INVESTING Activities on a Statement of Cash Flows?
Cash received:
- Sale of PP&E- Sale of Investments- Loan Principle
Cash paid:
- Loans- Acquisitions- AFS or HTM Securities- Taxes- Trading Securities
What items are included in FINANCING Activities in a Statement of Cash Flows?
- Cash effects of transactions obtaining resources from owners & providing them with a return on their investment
Cash received:
- Issuance of Stock- Issuance of Debt
Cash paid: Dividends
What is the DIRECT Method for a Statement of Cash Flows?
Starts with Income from Continuing Operations
Adjusts for changes in accounts like:
- A/R- A/P- Inventory
- Non-cash revenues- expenses- gains- losses
If used- the Indirect Method must also be shown
What is the INDIRECT Method for a Statement of Cash Flows?
Starts with Net Income
Adjusts for changes in accounts like:
- A/R- A/P- Inventory
- Non-cash revenues- expenses- gains- losses
Cash & Cash Equivalents Reconciliations
- Statement of Cash Flows reconciles the cash & cash Equiv. amount presented on the Beginning Balance sheet
- To the cash & cash Equiv. amount presented on the ending B/S
- The change in cash for the period
Cash & Cash Equivalents
- Cash equivalents are defined as short-term, liquid investment that are:
- Quickly convertible into specific amounts
&
-So near maturity that the risk of changes in the value b/c of interest rate changes is significant
Operating Activities- Direct Method
- Major classes of cash receipts & Disbursements are presented in their GROSS amounts.
Operating Activities to report separately
Increases Cash:
- Cash Received from customers
- Interest Received
- Dividends Received
- Insurance proceeds & Lawsuit settlements
- Sales of Securities classified as trading securities
- Cash paid to suppliers & employees
(Decreases cash)
Operating Activities- Indirect Method
- Net Income is adjusted to arrive at net cash flows from operating activities
- Supplemental Disclosure of cash paid for interest & income taxes is required.
Adjustments made to Operating Activities Section “CLAD”
CLAD:
- Current Assets & Liabilities
- Losses & Gains
- Amortization & Depreciation
- Deferred Items
What is NOT disclosed on the St. of Cash Flows when using the Direct Method, US GAAP?
- A Recon. of Ending R/E to net cash flow from operations.
Investing Activities items
- Purchase of A/S Bonds (Net Amount)
- Sale of Equipment (add)
- Purchase of Equipment (Subtract)
Operating Activities that are ADDED back to Net Income
- Dep. Expense
Operating Activities that are DEDUCTED From Net Income
- Gains
- Increase in Inventory
- Decrease in A/P
Financing Activities Items
- Sale of Treasury Stock is Added
- Dividend Payment & Retirement of bonds:Subtract
In St. of CF, If used equipment is sold at a gain, the amount shown as cash Inflow from investing activities equals?
-the carrying amt Plus the Gain
How would a Capital Lease payment be reported in the St. of Cash Flows?
- The cash outflow Principal payments are reported in the Financing Section
- The cash outflow Interest payments would be reported as a component of cash from Operating Activities.
How should a gain from the sale of Used Equip. for cash b reported in St. of Cash Flows, INDIRECT METHOD?
- In Operating Activities as a deduction from Income.
Amortization of a Bond Discount using Indirect Method?
- Operating Activity
- As an Addition/Deduction to Net Income
- Since it was originally deducted from Net Inc, so a Decrease in Amort. Discount would ‘Add’ back into Net Inc.
Under IFRS, Interest RECEIVED during a period is reported on the statement of CF in?
- Operating or Investing Cash Flow
Under IFRS, Interest/Dividends PAID during a period is reported on the statement of CF in?
- Operating or Financing Cash Flow
