IAS 7 - SOCF Flashcards
what is the objective of the SOCF?
to provide users with the basis to assess the entity’s ability to generate cash flows
what does cash comprise of?
cash OH and demand deposits (cash in bank)
what are the components of the SOCF?
- investing activities
- financing activities
- operating activities
which activity shows the entity’s ability to generate sufficient cash to pay its debts, etc?
operating activities
what do investing activities show?
- company’s investments through exp that rec an asset
- expenditures made for resources which will generate future inc
which methods can we use for operating activities?
- direct
- indirect method
what is the direct method?
CF are shown separately and not netted off
- cash to cust
- cash from supp
- cash to empl.
what is the indirect method?
P/L before tax is adjusted for non-cash items and working capital changes
which cash flows can fall under any activity?
int received
int paid
dividend received
capitalized borrowing costs?
- may need to be included in CFS
- remember when constructing asset accounts
research and development costs?
- amort/imp = non-cash
- investing activity when paid
FV adjustments
remember when constructing asset accounts
what do we include at end of SOCF?
include net flow (total), o/b CCE and c/b CCE
