Statement of Cash Flows

Question 1

What items are included in operating activities on the Statement of Cash Flows?

Answer 1

Cash received from Customers- Interest & Dividends- Trading Securities

Cash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities

Question 2

What items are included in investing activities on a Statement of Cash Flows?

Answer 2

Cash received: Sale of PP&E- Sale of Investments- Loan Principle

Cash paid: Loans- Acquisitions- AFS or HTM Securities- Taxes- Trading Securities

Question 3

What items are included in Financing Activities in a Statement of Cash Flows?

Answer 3

Cash received: Issuance of Stock- Issuance of Debt

Cash paid: Dividends

Question 4

What is the direct method for a Statement of Cash Flows?

Answer 4

Starts with Income from Continuing Operations

Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses

If used- the Indirect Method must also be shown

Question 5

What is the Indirect Method for a Statement of Cash Flows?

Answer 5

Starts with Net Income

Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses

Question 6

Examples of direct method operating activities

Answer 6

Cash collected, Interest and dividends received, cash paid to employees and suppliers, income tax paid, interest paid

Question 7

What is the indirect method

Answer 7

Net income adjusted for changes in current assets other than cash and in current liabilities. Items that resulted from noncash events must be removed from accrual basis income

Question 8

Different in disclosure of noncash transactions for IFRS and GAAP

Answer 8

IFRS - noncash disclosed in notes to financial statements
GAAP - if only a few, report at bottom of statement of cash flows or report in separate schedule in notes to financial statements

Question 9

What items are included in operating activities on the Statement of Cash Flows?

Answer 9

Cash received from Customers- Interest & Dividends- Trading SecuritiesCash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities

Question 10

What items are included in investing activities on a Statement of Cash Flows?

Answer 10

Cash received: Sale of PP&E- Sale of Investments- Loan PrincipleCash paid: Loans- Acquisitions- AFS or HTM Securities- Taxes- Trading Securities

Question 11

What items are included in Financing Activities in a Statement of Cash Flows?

Answer 11

Cash received: Issuance of Stock- Issuance of DebtCash paid: Dividends

Question 12

What is the direct method for a Statement of Cash Flows?

Answer 12

Starts with Income from Continuing OperationsAdjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses If used- the Indirect Method must also be shown

Question 13

What is the Indirect Method for a Statement of Cash Flows?

Answer 13

Starts with Net IncomeAdjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses

Question 14

Examples of direct method operating activities

Answer 14

Cash collected, Interest and dividends received, cash paid to employees and suppliers, income tax paid, interest paid

Question 15

What is the indirect method

Answer 15

Net income adjusted for changes in current assets other than cash and in current liabilities. Items that resulted from noncash events must be removed from accrual basis income

Question 16

Different in disclosure of noncash transactions for IFRS and GAAP

Answer 16

IFRS - noncash disclosed in notes to financial statements GAAP - if only a few, report at bottom of statement of cash flows or report in separate schedule in notes to financial statements

Question 17

What is the main purpose of statement of cash flows

Answer 17

Provide relevant information about cash receipts and disbursements of enterprise during period

Question 18

How is the purchase of cash equivalents with cash affect cash flows

Answer 18

It is not a cash outflow

Question 19

How is the cash settlement from insurance recorded on statement of cash flows

Answer 19

Investing activities

Question 20

How are cash receipts and payments shown on statement of cash flows

Answer 20

By gross amount, not net

Question 21

How are payments of PPE recorded on statement of cash flows

Answer 21

Cash outflow from investing activities

Question 22

How are noncash activities disclosed

Answer 22

In bottom of statement of cash flows

Question 23

Examples of operating activities net income adjustments

Answer 23

Gain on sale of equipment Amortization of bond discount

Question 24

Examples of financing activities

Answer 24

Dividends paidSale of treasury stock

Question 25

How are excess dividends declared over dividends paid recorded on statement of cash flows

Answer 25

Noncash financing activity

Question 26

Examples of financing activities

Answer 26

Repayment of debtPayment of capital lease - principal only, interest is operating activity

Question 27

What should be included in a supplementary schedule to statement of cash flows

Answer 27

Information about all investing and financing activities of an enterprise that affect cash receipts and payments

Question 28

What should not be included on the statement of cash flows and why

Answer 28

Cash flow per share because it may be misleading

Question 29

How are income taxes paid treated under the direct and indirect method

Answer 29

Direct - cash from operating activities Indirect - required supplemental disclosure

Question 30

Calculate cash paid for cost of goods sold

Answer 30

Cost + (EI - BI) - (EAP - BAP)

Question 31

Calculate cash paid for interest

Answer 31

Interest Exp - (End income tax payable - beg tax payable) - (End def tax payable - Beg def tax payable)