Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Reporting & Analysis 2 > Statement of Cash Flows > Flashcards

Statement of Cash Flows Flashcards

1
Q

what accounting standard deals with the statement of cash flows

A

IAS 7: Statement of Cash Flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what does the statement of cash flows report

A

the flows of cash in and out of a business during an accounting period

allowing to draw attention to any cash problems

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

how are cash and profit different

A

profit is based on many estimations e.g. depreciation, allowance of doubtful debt

this makes profit malleable

cash cannot be manipulated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

what is considered to be cash

A

cash on hand
cash in bank
bank overdraft = neg cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is considered to be cash equivalents

A

short term liquid investments eg treasury bills with less than one year maturity

(i.e. no risk of it changing value)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

what are the three classes of activity identified in IAS 7: Statement of Cash Flows

A

Operating
Investing
Financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what are operating activities

A

day to day activities that produce revenue for the entiity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what are investing activities

A

buying and selling of long term assets and investments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

what are financing activities

A

related to changes in size and composition of equity and debt of the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

examples of inflows of cash from operating activities

A

sale of goods or services

fees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

examples of cash outflows from operating activities

A

paying suppliers

paying employees

paying taxes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

examples of inflows from investing activities

A

selling ppe
selling intangibles
selling investments in other entities
repayment of loans from other entities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

examples of cash outflows from investing activities

A

buying ppe
buying intangibles
buying investment in other entities
lending money to other entities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

example of cash inflows from financing activities

A

issuing shares
issuing bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

examples of cash outflows from financing activities

A

buy back shares
repay bonds
dividends paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what are the two methods for cash flows

A

direct
indirect

17
Q

how does the direct method work

A

receipts and payments accounting for individually

normally done by insiders, otherwise won’t have books of original entry

18
Q

how does the indirect method work

A

begins at profit/loss before tax and adjustments made from there

19
Q

which is the more popular method

A

indirect

20
Q

do the indirect and direct method produce the same result

A

yes

21
Q

what are some examples of non cash expenses

A

depreciation
loss on disposal

22
Q

how are non cash expenses treated

A

added back

23
Q

what are some examples of non cash income

A

decrease in allowance for doubtful debt
gains on disposal

24
Q

how are non cash incomes treated

A

subtracted

25
Q

what are the elements of adjustments for working capital

A

inventories
trade payables
trade receivables
accruals
prepayments

26
Q

what are the disclosure requirements of IAS 7

A

disclose components of cash and cash equivalents and present reconciliation of these amounts in SOCF

also encouraged to supply:
- amount of any undrawn borrowing facilities
- analysis

27
Q

how to treat depreciation

A

add back because non cash item

28
Q

how to treat amortisation

A

add back because non cash item

29
Q

how to treat interest expenses

A

add back because non operating

30
Q

how to treat decrease in inventory

A

cash up because cash gained from sales

add

31
Q

how to treat increase in inventory

A

cash down because money spent on purchases

subtract

32
Q

how to treat decrease in trade receivables

A

add

cash up as credit from customers paid

33
Q

how to treat increase in trade receivables

A

subtract

cash down as no cash made yet from sales

34
Q

how to treat increase in trade payables

A

add

more loans not paid means no cash spent

35
Q

how to treat decrease in trade payables

A

subtract

cash spent on repaying credir

36
Q

are cash flows from operations usually positive or negative

A

positive

37
Q

are cash flows from investments usually positive or negative

A

negative

Financial Reporting & Analysis 2 (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions