Cash Flow Plus

Question 1

Calc bonus as a % of income before bonus but after tax

Answer 1

Multi part algebra
Bonus = B
Tax = T
Tax % = x
Bonus % = m
If:
B = m(Income-T)
T = x(Income-B)
then:
B = m(Income - [x(Income-B)]

Question 2

Statement Changes in Equity

GAAP vs IFRS

Answer 2

IFRS

• Must be separate statement (US allows footnotes or sup. statement as well)
• Must separate non-owner changes

Question 3

Statement of Cash Flow

Answer 3

Operating
Investing
Financing
Foreign transaction adjustments
Change in Cash
 beg cash
 end cash
Non-cash Inv. and Fin. activities

Question 4

Statement of Cash Flow

Direct & Indirect

Answer 4

Direct Indirect
Op CF Reconciliation
Inv CF Inv CF
Fin CF Fin CF

Question 5

Dividend Inc and Interest Income on bonds

Answer 5

Operating Activities

Question 6

OIF - for Cash Flows

GAAP vs IFRS

Answer 6

Activity IFRS GAAP
Int Paid Op or Fin Op only
Int Rec’d Op or Inv Op only
Taxes paid Op or Fin or Op only
Inv if applies to inv
Div Rec’d Op or Inv Op only
Div Paid Op or Fin Fin only
Cash & eq bank overdraft no

Question 7

Op/Inv/Fin Cash Flow?

Payment to suppliers

Answer 7

Operating

Question 8

Op/Inv/Fin Cash Flow?

Interest payment

Answer 8

Operating

Question 9

Op/Inv/Fin Cash Flow?

Payment to retire bonds

Answer 9

Financing

Question 10

Op/Inv/Fin Cash Flow?

Downpayment to purchase equipment

Answer 10

Investing

Question 11

Op/Inv/Fin Cash Flow?

Payment on purchased equipment loan

Answer 11

Financing

Question 12

Op/Inv/Fin Cash Flow?

Obtain loan on property held as investment

Answer 12

Financing

Question 13

Op/Inv/Fin Cash Flow?

Purchase of treasury stock

Answer 13

Financing

Question 14

Op/Inv/Fin Cash Flow?

Depreciation Expense

Answer 14

Not a cash flow

Question 15

Op/Inv/Fin Cash Flow?

Purchase of trading securities

Answer 15

Operating

Question 16

Op/Inv/Fin Cash Flow?

Mortgage payment

Answer 16

Operating & Financing (principal & interest)

Question 17

Op/Inv/Fin Cash Flow?

Dividends on investments

Answer 17

Operating

Question 18

Op/Inv/Fin Cash Flow?

Loss on disposal of equipment

Answer 18

Not a cash flow

Question 19

Op/Inv/Fin Cash Flow?

Proceeds from sale of securities available for sale

Answer 19

Investing

Question 20

Op/Inv/Fin Cash Flow?

Annual lease payment on capital lease

Answer 20

Operating & Financing (principal & interest)

Question 21

Op/Inv/Fin Cash Flow?

Payment to fund company pension plan

Answer 21

Operating

Question 22

Op/Inv/Fin Cash Flow?

Increase in A/R

Answer 22

Not a cash flow

Question 23

Which SCF format? Direct/NonDirect/Both?’

Proceeds from sale of land held as investment

Answer 23

Both

Question 24

Which SCF format? Direct/NonDirect/Both?

Change in wages payable

Answer 24

Both - this is a reconciliation account

Question 25

Which SCF format? Direct/NonDirect/Both? | Income Taxes paid

Answer 25

Direct

Question 26

Which SCF format? Direct/NonDirect/Both? | Insurance premium payments

Answer 26

Direct

Question 27

Which SCF format? Direct/NonDirect/Both? | Real estate taxes paid

Answer 27

Direct

Question 28

Which SCF format? Direct/NonDirect/Both? | Change in income tax

Answer 28

Both - this is a reconciliation account

Question 29

Which SCF format? Direct/NonDirect/Both? | Patent amortization

Answer 29

Both - this is a reconciliation account

Question 30

Which SCF format? Direct/NonDirect/Both? | COGS

Answer 30

Neither

Question 31

Which SCF format? Direct/NonDirect/Both? | Proceeds from sale of LT bond investment

Answer 31

Both

Question 32

Which SCF format? Direct/NonDirect/Both? | Collections on loans to customers (principal)

Answer 32

Both - shown as an investment activity

Question 33

Which SCF format? Direct/NonDirect/Both? | Collections on loans to customers (interest)

Answer 33

Direct - shown as an operating activity

Question 34

Which SCF format? Direct/NonDirect/Both? | Dividends paid

Answer 34

Both - Financing

Question 35

Which SCF format? Direct/NonDirect/Both? | Amortization of Bond Discount

Answer 35

Both

Question 36

Which SCF format? Direct/NonDirect/Both? | Proceeds from sale of land (noninvestment)

Answer 36

Both

Question 37

Which SCF format? Direct/NonDirect/Both? | Purchase of cash equivalent securities

Answer 37

Neither - not a cash flow

Question 38

Loss on sale of assets

Answer 38

Reduces NI but not CF - must be added back to CF

Question 39

Indirect Method of SCF | Decrease in A/R

Answer 39

Added to accrual NI Increase in A/R is subtracted

Question 40

Indirect Method of SCF | Decrease in Inventory

Answer 40

Added to accrual NI Increase would be subtracted

Question 41

Indirect Method of SCF | Decrease in Unearned Revenue

Answer 41

Subtracted from accrual NI Increase would be added

Question 42

Indirect Method of SCF | Decrease in A/P

Answer 42

Subtracted from accrual NI Increase would be added

Question 43

SCF add or subtract equation

Answer 43

Chg in Cash = Chg in Liabilites + Chg in OE - Chg in all other assets Works for NI & Sales - Opposite signs for Expenses

Question 44

Interest & Taxes paid in SCF using indirect method are reported where?

Answer 44

Notes or supplementary schedulre

Question 45

Op/Inv/Fin Cash Flow? | Dividends paid

Answer 45

Financing

Question 46

Op/Inv/Fin Cash Flow? | Dividends paid

Answer 46

Financing