Statement of Cash Flows

Question 1

What is the purpose of statement of cash flow

Answer 1

To provide info about sources and use of cash and cash equivalent.

Question 2

What is operating cash flows?

Answer 2

cash receipts and disbursements from

1. Transaction reported on income statement
2. CA and CL

Question 3

What is investing cash flows?

Answer 3

Non current assets.

Question 4

What is financing cash flows?

Answer 4

Debt (including non current liabilities) and equity

Question 5

Cash equivalent means

Answer 5

within three months of the purchase date.

Question 6

Indirect method starts from

Answer 6

Net income

Question 7

In indirect method changes in debit balance accounts will have what effect

Answer 7

the opposite effect on cash flows because cash is a debit balance account

Question 8

In indirect method changes in credit balance accounts will have what effect

Answer 8

Same effect on cash flows.

Question 9

Where info about non cash financing and investing should be provided

Answer 9

Separately in a supplemental disclosure.

Question 10

What activity is selling products/ collecting receivables

Answer 10

Operating cash flow

Question 11

What activity is purchasing inventory/ paying vendors

Answer 11

Operating cash flow

Question 12

What activity is purchasing supplies and services / paying vendors

Answer 12

Operating cash flow

Question 13

What activity is Paying taxes

Answer 13

Operating cash flow

Question 14

What activity is Purchasing. selling trading securities (general rule)

Answer 14

Operating cash flow

Question 15

What activity is purchasing long-term assets or long-term investments for cash

Answer 15

Investing

Question 16

Recording depreciation, amortization, or depletion

Answer 16

No net cash flow

Question 17

Collecting interest on an investment

Answer 17

Operating cash flow

Question 18

Collecting dividends on an investment

Answer 18

Operating cash flow

Question 19

Recording income of equity method affiliates

Answer 19

No net cash flow

Question 20

Selling long-term assets or investments(non cash equivalents and non-trading securities)- cash proceeds

Answer 20

Investing

Question 21

Borrowing funds (i.e. bank loans, issuing debt)

Answer 21

Financing Cash flow

Question 22

Paying interest on debt

Answer 22

Operating cash flow

Question 23

Paying principal on debt

Answer 23

Financing Cash flow

Question 24

Issuing common or preferred stock

Answer 24

Financing Cash flow

Question 25

Paying dividends on common or preferred stock

Answer 25

Financing Cash flow

Question 26

Repurchasing of stock ( i.e. treasury shares)

Answer 26

Financing Cash flow

Question 27

Interest received goes in GAAP and IFRS

Answer 27

GAAP - Operating and IFRS - Operating or Investing

Question 28

Interest paid goes in GAAP and IFRS

Answer 28

GAAP - Operating and IFRS Operating or Financing

Question 29

Dividends received goes in GAAP and IFRS

Answer 29

GAAP - Operating and IFRS - Operating or Investing

Question 30

Dividends paid goes in GAAP and IFRS

Answer 30

GAAP - Financing and IFRS - Operating or Financing

Question 31

Taxes paid goes in GAAP and IFRS

Answer 31

GAAP - Operating and IFRS - Operating, Financing or Investing.