F7 Equity, EPS, and Cash Flows

Question 1

What are the sections of a cash flow statement using the direct method?

Answer 1

1. CASH RECEIVED FROM CUSTOMERS
2. Interest received
3. Dividends received
4. other operating cash receipts (insurance proceeds or settlements)
5. cash received from sale of trading securities (classified as current assets)
6. CASH PAID TO SUPPLIERS & EMPLOYEES
7. interest paid
8. income taxes paid
9. cash to purchase trading securities
10. OTHER OPERATING CASH PAYMENTS

Question 2

For Cash flows direct method, what is the formula for the CASH RECEIVED FROM CUSTOMERS portion?

Answer 2

CASH RECEIVED FROM CUSTOMERS =
Revenues
- increase in AR
+ decrease in AR
+increase in deferred revenue
- decrease in deferred revenue

Question 3

For Cash flows direct method, what is the formula to calculate CASH PAID TO SUPPLIERS AND EMPLOYEES?

Answer 3

CASH PAID TO SUPPLIERS =
COGS
+ increase in inventory
-decrease in inventory
- increase in AP
+ decrease in AP

CASH PAID TO EMPLOYEES =
payroll and wages expenses
- increase in wages payable
+ decreases in wages payable

Question 4

For cash flows direct method, what is the formula to calculate OTHER OPERATING CASH PAYMENTS?

Answer 4

OTHER OPERATING CASH PAYMENTS =
other operating expenses
- decrease in prepaid expenses
+ increase in prepaid expenses
+ decrease in accrued liabilities

Question 5

For SCF direct method, cash major classes of cash receipts and disbursements are presented in their gross amounts and totaled to arrive at what?

Answer 5

Net cash flow from operating activities