Outcome 2B - Cash Flow

Question 1

Define accrued expense.

Answer 1

An accrued expense is one that has been consumed in the current period, but is yet to be paid for.

Question 2

Define depreciation expense.

Answer 2

Depreciation expense is that part of the value of a non-current asset that has been consumed in the current reporting period.

Question 3

What is accumulated depreciation?

Answer 3

Accumulated depreciation is the value of a non-current asset that has been consumed this far.

Question 4

What is the purpose of Balance Day Adjustments?

Answer 4

To ensure that an accurate profit figure is determined, by correctly altering the figures for revenues earned and expenses incurred in the current reporting period.

Question 5

What are the uses of a cash flow statement?

Answer 5

To aid decision-making about the firms cash activities, by detailing the sources and uses of cash in a particular period, to asses the firm’s performance in meeting cash targets, and to assist in planning for future cash activities.

Question 6

What is the layout of the cash flow statement?

Answer 6

Cash flow from \_\_\_\_ activities 
Net cash flow from \_\_\_ activities 
Net Increase (Decrease) in the Cash Position 
Add Bank Balance at start 
Bank Balance at end

Question 7

Define prepaid expense.

Answer 7

A prepaid expense refers to an expense that has been paid for but is yet to be consumed.