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Flashcards in SCF Deck (13):

1. Cash surrender value for life insurance

2. Investment in subsidiary

3. Investment revenue received from subsidiary

4. Dividend received from subsidiary

1. Investing

2. Investing

3. Operating ( record the net of investment revenue and dividend) dividend has cash, investment revenue might have no cash, so the net is if dividend >investment revenue (+), otherwise, (-)


Quasi-reorganization scenario and recording in SCF

When company have negative RE

Treatment: get rid of negative RE by transfer PIC to RE, or even some of the NI, JE is:
1. C/S xx.

When NI is transferred to RE, SCF still record the whole NI earned during the year.

2. PIC. xx
RE. Xx


Accrued taxes payable

T account is the best

Beginning taxes payable + cash paid during the year -X = ending balance taxes payable. In note record as cash paid during the year for: taxes


Discount record for SCF when issuing

premium recording for early bond retirement

Discount amortization: face value amount - net cash proceed amount = discount - recorded discount = armor. Amount

Premium amortization: total premium from issuance / amortization period


Decrease in bond discount from year 1 to year 2

Deduct from interest expense and record in operating section for direct method


Income tax expense paid calculation

Income tax expense recorded - increase in DTL - ending inc. tax payable

Use t account and JE is better to understand the process
JE: Inc. tax exp. xx
DTL. x. ( if DTL increase)
Cash x
The cash amount then can plug in the T account

Beginning inc. tax. Payable + cash paid for income tax - ending inc. tax payable = inc. tax. Paid


Under direct method and indirect method, dividend received from investment?

Increase cash from from operating activities


1. Paying portion in cash for a building, the rest using a mortgage note payable,What activities are they belong to?

2. Acquire a forklift, paid 3000 down payment, and then the rest was financed, what activities are they belong to?

1. Cash portion for the building is investing activities
The mortgage note payable portion is non-cash transaction

2. First 3000 is investing, the rest is financing activities


What included in direct method cash collected from customers? What about indirect method accounts receivable related items?

Direct method deducting write off to find the cash collected from customers
Indirect method using u collectable amount to find net accounts receivable amount


When using direct mood to prepare SCF, what must also happen ?

Indirect methods of "adjustment to reconcile net income to net cash provided by ....." Will also be used for operating section. The total amount adjustment will be used before find the net cash provided by OA.


The primary purpose for SCF is?

Showing cash collections and distributions during a period


Short-term cash equivalent investment is included in SCF?

Absolutely NO!


Premium amortization -
Disc. armor. +

Pension plan contribution = contribution + return on asset - service cost - interest cost

Extraordinary repair

All in operating section except extraordinary repair record at investing section

The key for amortization of premium and discount is not to get cash, but to get interest expense for interest paid section