IAS 7 - SOCF

Question 1

what is the objective of the SOCF?

Answer 1

to provide users with the basis to assess the entity’s ability to generate cash flows

Question 2

what does cash comprise of?

Answer 2

cash OH and demand deposits (cash in bank)

Question 3

what are the components of the SOCF?

Answer 3

• investing activities
• financing activities
• operating activities

Question 4

which activity shows the entity’s ability to generate sufficient cash to pay its debts, etc?

Answer 4

operating activities

Question 5

what do investing activities show?

Answer 5

• company’s investments through exp that rec an asset
• expenditures made for resources which will generate future inc

Question 6

which methods can we use for operating activities?

Answer 6

• direct
• indirect method

Question 7

what is the direct method?

Answer 7

CF are shown separately and not netted off
- cash to cust
- cash from supp
- cash to empl.

Question 8

what is the indirect method?

Answer 8

P/L before tax is adjusted for non-cash items and working capital changes

Question 9

which cash flows can fall under any activity?

Answer 9

int received
int paid
dividend received

Question 10

capitalized borrowing costs?

Answer 10

• may need to be included in CFS
• remember when constructing asset accounts

Question 11

research and development costs?

Answer 11

• amort/imp = non-cash
• investing activity when paid

Question 12

FV adjustments

Answer 12

remember when constructing asset accounts

Question 13

what do we include at end of SOCF?

Answer 13

include net flow (total), o/b CCE and c/b CCE