Approaches to Cash Flow Flashcards
What is the first thing you do in a cash flow statement?
Calculate the change in cash - the three numbers at the bottom
This includes any overdrafts within the current liabilities
What is step 2 of a cash flow?
Put in the easy figures (operating profit, changes in inventory, receivables, payables etc.)
How do you charge a profit or loss on the disposal of NCAs to a cash flow statement?
You subtract a profit on disposal of non-current assets but add a loss
How do you account for a movement in inventories?
You subtract an increase in inventories but add a decrease
How do you account for the movement in trade and other receivables?
You subtract an increase in trade and other receivables but add a decrease
How do you account for movement in trade and other payables?
You add an increase in trade and other payables but deduct a decrease
How do you account for investment income?
You deduct it
What is finance cost in the statement of cash flow?
Interest expense
How do you calculate interest/tax paid?
T-account:
Dr side:
Cash (balancing figure)
This years balance (Tax Payable/Liability) (SFP)
Cr side:
Last Year’s Balance B/F (Tax Payable/Liability) SFP)
Expense (SPL)
How do you calculate interest/dividends received?
T-Account:
Dr:
Last Years Balance B/F (SFP)
Income (SPL)
Cr:
Cash (balancing figure)
This years balance C/F (SFP)
How do you account for PPE Cost (purchases)? (Same for intangible assets)
T-account:
Dr:
Last years balance (SFP)
Additions (balancing figure)
Cr:
Disposal (cost of asset)
This years balance (SFP)
How do you account for PPE when cost and ad are not separated?
Dr:
Last years balance (SFP)
Additions (Balancing figure)
Cr:
Disposal at carrying amount
Depreciation (SPL)
This years balance (SFP)
How do you account for depreciation?
T-account:
Dr:
Disposal (Cost - CV)
This years balance
Cr:
Last years balance
Depreciation (balancing figure)
How do you calculate the proceeds from sale of PPE?
Proceeds (balancing figure)
(Less carrying value)
=
Profit/(loss) on disposal
How do you account for proceeds from issue of shares?
- Difference between sum of closing balances on share capital and share premium and opening balances
In a T Account that combines Share Capital and Share Premium:
Dr:
This years balance
Cr:
Last years balance
Any use of retained earnings
Cash - balancing figure
