Exam 7: Presentation of Cash Flows

Why is the statement of cash flows important?

What type of activity is the paying off of a bank loan?

Which of the following statements is correct concerning investing activities?

Activities that obtain funds from investors and lenders to start and sustain a business are called:

Which of the following is a fundamental purpose of the cash flow statement? To report the To report the Inflows of cash outflows of cash

Which duties associated with handling and accounting for cash should ideally be separated in order to promote the internal control of the asset?

In the financial year ending 31 December, Price Pty Ltd collected $80 000 from customers, paid wages to employees of $10 000, and received dividends of $12 000. What was the net cash flow from operating activities for the financial year ending 31 December?

Pele runs a soccer coaching school. During the year ended 30 June, coaching fees of $54 800 were received in cash. Fees due but not received or recorded at 30 June totalled $1000. Fees received in advance at 30 June totalled $800. Cash expenses paid during the year ended 30 June totalled $32 000. Accrued expenses due but not paid at 30 June totalled $2850.

You are considering starting a new business. In general, which of the following types of activities would have to occur before operating activities could begin? Investing activities Financing activities

A cashier is employed at the Square Eyes Movie Theatre Complex in downtown Flatscreen. The cashier is responsible for the collection of cash in return for issuing a movie ticket, including acceptance of payment for tickets on credit card and by discount vouchers. While credit sales and full cash payments are recorded on the computer at the time of sale, the vouchers received need to be cross-checked with the discounted tickets recorded on the computer at the time of sale. This procedure is carried out at the end of every week by an employee of the company, but not by the cashier, who has argued that it would be more efficient for the cross-check to be done at the end of every day by the cashier who has issued the discounted tickets, as that person would be most familiar with what tickets had been sold. Based on this information, which of the following statements is correct regarding the current procedure?

Activities that involve the production or delivery of goods for sale or the providing of services for sale should be listed under which classification on a cash flow statement?

Which of the following is a cash flow from an investing activity?

Which of the following would be considered the least effective management of cash?

Which of the following is subtracted from net profit to arrive at cash from operations?

An increase in accounts receivables and an increase in inventory will need to be subtracted from operating profit in the calculation of net cash flows from operating activities.

The methods an organisation uses to obtain financial resources from financial markets and the ways in which it manages those resources are:

Investing all cash to maximise returns to the business is a more effective management of cash than ensuring cash is available to pay debts as they fall due.

The most common classification for interest paid and received on a cash flow statement is under operating activities.

Cash flows from operating activities is a negative amount. From this fact you know that:

The following financial statements have been prepared for Clearview for the month of June. The financial statements have been prepared using accrual accounting, except to the extent evident in the information provided. The business is a sole proprietorship. Trading commenced on 1 June. The business offers a window cleaning service on both cash and credit terms. Forty per cent of the work completed in June was on credit. Customers are given 30 days to pay. The proprietor invested cash of $2500 and a vehicle valued at $27 000 at 1 June. Clearview Statement of comprehensive income For the month of June Clearview Balance sheet As at 30 June Discuss the performance of the business for the period as revealed by the foregoing financial statements, paying particular attention to the entity's profitability and cash position.