Exam 16: The Statement of Cash Flows

Describe the application of IAS 7 to interest and dividends received.

If a business consistently has positive cash flows from financing and negative cash flows from investing and operating activities,this is a positive sign for the business.

Saints Plc is preparing a statement of cash flows for the year ended 30 June 2014.You are the accountant of the entity and have collected the following data: Gain on sale of equipment 12,000 Proceeds from sale of equipment 20,000 Purchase of government bonds (dated 30 June 2014, face value of \ 400,000) 360,000 Dividends declared 90,000 Dividends paid 76,000 Proceeds from issue of share capital 150,000 What is the amount of net cash used in investing and financing activities respectively?

Cod Ltd provides the following information for the period ended 30 June 2014: \ 0 Cost of goods sold for the year 110 Discounts received for early payment to suppliers 82 Wages 62 Opening balance of trade creditors 40 Closing balance of trade creditors 45 Opening balance of inventory 30 Closing balance of inventory 15 What is the cash paid to suppliers for the period?

Up and Away Unlimited provides the following information for the period ended 30 June 2014: \ 0 Cost of goods sold for the year 450 Discounts received for early payment to suppliers 25 Opening balance of trade creditors 210 Closing balance of trade creditors 240 Opening balance of inventory 111 Closing balance of inventory 130 What is the cash paid to suppliers for the period?

Discuss the differences between the direct and indirect methods when reporting cash flows from operating activities.

The following information is provided for Unique Ltd for the period ended 30 June 2015: \ 0 Cost of goods sold for the year 930 Discounts received for early payment to suppliers 60 Opening balance of trade creditors 160 Closing balance of trade creditors 250 Opening balance of inventory 85 Closing balance of inventory 110 Sales for the year 1,560 Discounts provided to customers for early payment 79 Doubtful debts expense 38 Opening balance of accounts receivable 100 Closing balance of accounts receivable 130 Bad debts expense 47 Opening balance of the provision for doubtful debts 115 Closing balance of the provision for doubtful debts 90 Opening balance dividends payable 120 Closing balance dividends payable 80 All transactions are in cash unless otherwise indicated.What is the net cash flow from operating activities for the period?

What method does IAS 7 encourage for the reporting of cash flows from operating activities and what does it mean for the presentation of this category in the statement of cash flows?

Swans Machinery Plc reported a net profit of £3 000 000 for the year ended 30 June 2014.The following changes occurred in the statement of financial position: Increase (decrease) Equipment 250000 Accumulated depreciation 400000 Note payable 300000 Additional information: During the year Swans Plc sold equipment with a cost of £250 000 and had accumulated depreciation of £120 000 for a gain of £50 000. On 30 June 2014 Swans Plc purchased equipment costing £500 000 with £200 000 in cash and a note payable for £300 000. Depreciation expense for the year was £520 000 What is the amount of net cash from operating activities and net cash used in investing activities respectively for the year ended 30 June 2014?

Traditional financial ratios such as the current ratio or acid-test ratios have come in to question as it is argued that they do not monitor the organisation's:

It is currently argued that the presentation of the various financial statements lack:

Discuss the potential limitations of the statement of cash flows.

All cash flows from investing and financing activities are required to be reported on a gross basis.

Following are cash flow transactions for Cootamundra PlC: I Interest paid II Interest received III Dividends paid IV Dividends received V Purchase of property plant and equipment VI Proceeds from issue of shares Which of the following combinations includes all transactions that may by classified under investing activities of Cootamundra Plc that are in accordance with IAS 7 Statement of Cash Flows?

Sonic Co Ltd provides the following information for the period ended 30 June 2015: \ 0 Opening balance loans 800 Closing balance loans 550 Opening balance of interest payable 120 Closing balance of interest payable 130 Interest expense 75 Opening balance trade creditors 400 Opening balance trade creditors 600 Closing balance of share capital 3000 Opening balance of dividends payable 3900 Dlosing balance of dividends payable 430 Opening balance asset revaluation reserve 520 Closing balance asset revaluation reserve 520 Purchase of land for shares with market value of 990 During the period Sonic Co Ltd issued debentures with a face value of $1 000 000 at a premium of $560 000.All transactions are in cash unless otherwise indicated.What is the net cash flow from financing activities for the period?

Where the entity uses the direct method a note to the accounts reconciling cash flows from operating activities to net profit is required because:

Discuss the treatment of interest and dividends in accordance with IAS 7 Statement of Cash Flows.

Mopoke Ltd provides the following information that relates to the period ended 30 June 2014: \ 0 Dales for the year 1200 Discounts provided to customers for early payment 500 Doubtful debts expense 150 Opening balance of accounts receivable 300 Closing balance of accounts receivable 900 Bad debts expense 20 Opening balance of the provision for doubtful debts 20 Closing balance of the provision for doubtful debts 10 What amount of cash was received from customers during the year?

While the statement of cash flows is presently required along with the accrual statements,taking a balanced view,it would be sufficient to meet the accountability needs of general purpose financial statement users on its own.

Hybrid Ltd provides the following information for the period ended 30 June 2015: \ 0 Opening balance plant and equipment 1000 Closing balance plant and equipment 1203 Revalued plant: Cost 100 Accumulated depreciation 15 Revalued to 153 Plant purchased in exchange for services with fair value of 30 Plant sold for cash: Cost 400 Accumulated depreciation 250 Cash received 200 What was the amount of cash used to acquire plant and equipment?