Sources and Uses of Cash

Question 1

List the required categories for the Statement of Cash Flows.

Answer 1

Net cash inflow or outflow from Operating Activities;
Net cash inflow or outflow from Investing Activities;
Net cash inflow or outflow from Financing Activities;
Effects of Foreign Currency Translation;
Reconciliation of net cash inflows/outflows with the reported change in cash and cash equivalents on the Balance Sheet;
Non-cash Investing and Financing Activities.

Question 2

What is the indirect method on the statement of cash flows?

Answer 2

Reconciles net income to cash flows from operating activities.

Question 3

What is the basic purpose of the statement of cash flows?

Answer 3

The basic purpose is to provide information about the cash receipts and cash payments for an entity to help investors, creditors, and others.

Question 4

What is reported on the Statement of Cash Flows?

Answer 4

Information about the cash receipts and cash payments for an entity;
The difference between net income and net operating cash flows;
Information about investing and financing activities which do not involve cash inflows or outflows.

Question 5

When is a Statement of Cash Flows required?

Answer 5

For all business enterprises that report both financial position (Balance Sheet) and results of operations (Income Statement) for a period.

Question 6

Name the two formats permitted for the statement of cash flows.

Answer 6

Indirect.

Direct.

Question 7

What is the cash flow category for interest paid and received?

Answer 7

This category is Operating Activities.

Question 8

What is the direct method on the statement of cash flows?

Answer 8

This method presents actual inflows and outflows from cash operations. Must also disclose the indirect method (reconciliation of net income to cash flows from operations) as a supporting schedule.

Question 9

Name the four major sections in the direct method cash flow statement.

Answer 9

Operating cash flows;
Investing cash flows;
Financing cash flows.
Reconciliation of net income and net operating cash flows.

Question 10

What is the cash flow category for collections of principal amounts on loans made to other entities?

Answer 10

The category is Investing.

Question 11

What is the reporting basis of the statement of cash flows?

Answer 11

The reporting basis is cash and cash equivalents.