Stmt of cash flows

Question 1

3 sections

Answer 1

Operating
Investing
Financing

Question 2

Operating methods

Answer 2

direct

indirect

Question 3

Direct method

Answer 3

Adjust each I/S amount for any accrual amount

Question 4

Cash receipts from customers (direct)

Answer 4

Sales
+/- change in AR (from p/y)
+/- change in deferred revenue
= cash receipts from customers

Question 5

increase in asset

Answer 5

decrease in cash

Question 6

increase in liability

Answer 6

increase in cash

Question 7

Indirect method

Answer 7

Start with net income and adjust to include on operating cash flows.

1. Adjust for non cash items:
   depreciation
   gain/loss on sale of assets
2. Adjust for impact of accruals and deferrals.
   So for changes in working capital ie AR, AP, deferred revenue

Question 8

Investing

Answer 8

LT assets:

• PPE
• Intangibles
• Investments

Question 9

Financing

Answer 9

LT Liab & Equity

• Dividends paid (can elect to be operating)
• Interest (can elect to be operating)
• Change in loans
• Issue or redeem shares

Question 10

Cash paid to suppliers

Answer 10

COGS ( )
Amort included in cogs +
Employees included in cogs +
Admin expenses ( )
change in AP
change in inventory

Question 11

Cash paid to employees

Answer 11

Wage expenses ( )
Wages included in cogs ( )
change in wage payable