Statement of Cash Flows Flashcards
What items are included in operating activities on the Statement of Cash Flows?
Cash received from Customers- Interest & Dividends- Trading Securities
Cash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities
All other receipts/disbursements that do not stem from transactions defined as Investing or Financing
What items are included in investing activities on a Statement of Cash Flows?
“Investing in yourself or others”
Cash received: Sale of PP&E, Sale of Investments (AFS or or HTM - not Trading), Loan Principles (note: interest/dividends received are operating)
Cash paid: Loans, Investment Acquisitions (AFS or HTM only)
What items are included in Financing Activities in a Statement of Cash Flows?
Cash received: Issuance of Stock; Issuance of Debt (Bonds); Borrowing on a Loan
Cash paid: Dividends paid to shareholders; Paying back a loan
What is the direct method for a Statement of Cash Flows?
Starts with Income from Continuing Operations
Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses
If used- the Indirect Method must also be shown
What is the Indirect Method for a Statement of Cash Flows?
Starts with Net Income
Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses
Dividends paid vs. Dividends received on cash flow statement - how are each classified?
Dividends Paid = Financing
Dividends Received = Operating
Are Cash Flows per Share disclosed?
NO
What is the difference between GAAP and IFRS regarding Statement of Cash Flows?
IFRS allows both direct method and indirect method, but the indirect method uses “modified indirect method” which shows revenues and expenses in operating activities, and then reports the changes in working capital accounts”
Interest and Dividends Received - may be operating OR investing
Interest and Dividends Paid - may be operating OR financing
What is included in a Schedule of non-cash activities?
Transactions having no effect on cash:
- Conversion of bonds to stock (debt to equity)
- Purchase of an asset by incurring a mortgage, entering into a capital lease, or Issuing stock
If Indirect Method is used, what MUST be disclosed?
Cash Payments for Interest and Income Taxes must be disclosed
Schedule of non-cash investing and financing activities must also be disclosed
How is “obtaining resources from owners and providing them with a return on their investment” classified on the cash flow statement?
As Financing Activity: This activity refers to issuing stock and paying dividends, both of which are in the financing activities section of the statement of cash flows
How is a purchase of a US Treasury Bill reported on a Statement of Cash Flows?
It isn’t because it is only a re-classification of cash. Not an inflow or an outflow of cash
What rates are used to translate the cash flow statement?
Historical exchange rates and/or the weighted avg rates
