Statement of cash flow Flashcards
Using the indirect method what are some examples of supplemental disclosure in a statement of cash flow?
- Cash paid for interest
- Income taxes paid.
- Conversion of debt to equity
What is the primary purpose of a SOC?
Provide relevant information about the Company’s receipts and cash disbursements during a period.
How are amortization of bond discounts and premium treated in the SOC under the indirect method?
Amortization of bond discounts and premium are classified under operating activities.
1. Amortization of bond discounts are added back
2. Amortization of bond premiums are subtracted
How are dividends received and dividend paid classified in the SOC?
- Dividend paid = Financing activities
- Dividend received = Operating activities
How are purchases of equipment with with a portion of cash and financing treated for the SOC.
- The portion paid in cash is treated as investing activity
- The financing portion is disclosed under supplementary information in the non-cash investing and financing sections. Payments made to the financing loan are later reported in the financing activities section.
What are the type of transaction the financing activities section includes?
Transactions that involve long term liabilities and equity.
1. Proceeds from loans, notes, bonds.
2. Payment of loans, notes, bonds.
3. Issuing of common stock.
4. Dividends paid
Will cash flow per share be disclosed in the supplemental information of the statement of cash flow?
No, never.
What are typical non cash investing and financing activities reported on the SOC?
- Purchase of PP&E by issuing stock (Financing)
- Conversion of bonds to equity (Financing)
- Acquiring assets through a capital lease obligation (investing)
- Exchange of non cash asset for another non cash asset.
