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FA - May > Module 18 - Statement of Cash Flows > Flashcards

Module 18 - Statement of Cash Flows Flashcards

1
Q

Key objective for companies…

A

Generate cash

To make payments, reinvest in business or give a return to shareholders

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2
Q

Information about cash flows important?

A

Yes,

Shows the ability of companies to generate cash and the needs of the entity to utilise those cash flows

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3
Q

Three sections of cash flow statement?

A

Operation, investing, financing

Net total = the net increase/decrease for the period

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4
Q

Two methods of operating activities?

A

Direct method and indirect method

Same answer but some questions may only have some info for one

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5
Q

Cash generated from operations

A
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6
Q

Investing activities are…

A

How you invest your money in non current assets

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7
Q

Indirect method starts with…

A

Profit BEFORE tax

Then finance costs, dep charge, and loss from sale equipment

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8
Q

Operating activities consist of

A

Revenue producing activities of the entity (day to day operations if buying and selling stock, along with other expenses)

Other activities that are not investing or financing activities (i.e. interest paid and taxes paid)

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9
Q

Direct method for cash generated from Operations…

A

Cash receipts from customers

AND

Cash paid to suppliers and employees

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10
Q

Direct method:

Cash receipts from customers formula is…

A

Cash receipts:

Opening trade receivables + revenue - closing trade receivables

Open TR + REV - Closing TR

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11
Q

Direct method

Cash paid to suppliers and employees is…

A

Opening trade payables + Expenses - Closing trade payables

Calculate purchases as cost of sales

Purchases = Cost of sales from PL - Open inventories + closing

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12
Q

Indirect method…

A
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13
Q

Cash flows from investing activities…

A

Acquisition and disposal of assets and long term assets

  • Purchase of PPE
  • Sale proceeds of PPE
  • Purchase of investments
  • Proceeds from investments sales
  • Payment of loan receivable
  • Proceeds of loan receivable payments
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14
Q

Cash flows from financing activities…

A

Activities that result in the size and composition of debt and equity

  • Proceeds from share capital issue
  • Proceeds from issue if bonds
  • Proceeds from loan received
  • Payment of loan liabilities
  • Payment of lease liabilities
  • Dividends paid
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15
Q

Taxes paid is a cash flow from?

A

Operating Activities

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16
Q

Interest paid is cash flow from?

A

Operating activities

17
Q

Cash flow from operating activities include…

A
  • Day-to-day buying and selling stock

- Interest paid and taxes paid

18
Q

Proceeds from sale of investments is a type of…

A

Investing activity

19
Q

Direct Method Operations Cash Received formula is…

A
20
Q

Indirect cash receipts and indirect cash to supplier/employees formulas are…

A

FA - May (3 decks)

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