Statement of Cash Flow Flashcards
purpose
the basic purpose is to provide info about the cash recpts and paymts for an entity, to help investors, creditors and others to asses the past and future ability of the entity to generate sufficient cash to invest and meet obligations
When is the stmt of CF required
for all bus that report bal sheet and IS for a period
What is reported in stmt of CF
.- Info about $ recipt and pymts
.- the Diff bw NI and Net operating CF (NOCF)
.- Info about, investing and financing activities that do not involve inflows or outflows of cash
Basis of CF
the reporting basis is cash and cash equivalents
List the required categories of the stm of CF
Net Cash inflows and outflows from operating Actvt
Net cash inflows and outflows from investing Actvt
Net Cash inflows and outflows from financing Actv
Effects on currency translation
Rec of net cash infl and outfl w/the reported change in cash and cash equivl on the bal sht
Non cash investing and financing activities
Methods
Direct and Indirect
Direct Method
Presents actual inflows and outflows from cash oper. I must disclose the indirect method as a supporting schd
- Operating CF
- Investing CF
- -Financing CF
- Rec of NI and NI operating cash flows
Indirect method
It reconciles NI to CF from operating activities
Nemonic for CF
OIFF (O IFF I could only remenber)
Operating activities
come form adjustments to reconcile NI to the net CF and through the analysis of the change in assets and liabilities
cash Equivalents
The net change in cash and Csh equivl for a period is known
The purch of cash equiv using cahs is NOR and outflow of cash and csh eqvl, is only a change in composition
1.- Investments- Only when the orig maturity is wth 3 mth
(treausry bills, Money mkt funds)
2.- restricted cash is $ heald for specific purpose. Frquelly
RC is reported in a separate line on the bl sheet
3.- A change in policy for designated $equivalents or restricted cash is a chnge in accounting principle.
4.- the entity disclose how the change in cash on the SCF reconciles to the componentks of Cash on the bal sh. this rec can be on the face of the SCF or in footnotes
Graphic presentations
O Operating I
I Investing I Work Down
F Financing I
F Foreing Currency V
Net Change ————–> Reconciliation
Beg Cash given
- End Cash given ^
I Work Up
Schedule I
Noncash Investing (can be on a separe schd of footnt)
Noncash financing actv described
IFRS requires that significant noncash transactions be reported in the notes to the fiinancial statemt
Categories
Cash Flows from operating activities-Direct method
Cash flows from investing activities
Cash flows from financing activities
Operating Activities-Direct method
CASH INFLOWS
-from customers (makes sales collect cash)
-Interest income or dividend Income (under IFRS could also be treated as and investing)
-Sales of securities classified as trading
CASH OUTFLOWS
-to suppliers (buy Invt/oper exp)
-to employees (payroll)
-to government (taxes)
-for Interest and other operational exp
-Purchase of debt security classified as trading
Investing Activities
CASH INFLOWS:
-sale of PP&E ( is used eq sold at loss , the amt shown in CF is the carrying amt less the loss)
-sale of debt or equity securities of other entity(held to maturity AFS)
-collection of loan principal
-Sale of other productive assets(patent and equip not inv)
CASH OUTFLOWS
-purchase of PP&E
-Purchase of deb securities of other entities(invt of AFS held to maturity, comm lstock , bonds )
-Purchase of other productive assets(patent and equip not inv)
