(Week 6) Review of Cash Flow Statement AASB 107
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Questions and Answers

Which of the following activities is included in Operating Activities?

  • Repayment of borrowings
  • Issuance of shares
  • Purchase of non-current assets
  • Total sales for the period (correct)

    • Cash Flow Statements are not required by AASB 107.

    False

    What are the three categories of cash flow activities?

    Operating Activities, Investing Activities, Financing Activities

    The cash receipts from customers are derived from the formula: Accounts Receivable (Beginning) + Total Sales for the Period - Accounts Receivable (End) = ______.

    <p>Cash Receipts from Customers</p> Signup and view all the answers

    Match the cash flow activities with their descriptions:

    <p>Operating Activities = Day-to-day business operations Investing Activities = Buying and selling of long-term assets Financing Activities = Changes in equity and borrowings Cash Flows for Dividends Received = Cash movements related to returns to owners</p> Signup and view all the answers

    What should be ignored when preparing the Cash Flow Statement?

    <p>Depreciation</p> Signup and view all the answers

    Cash flow from investing activities includes cash paid to employees.

    <p>False</p> Signup and view all the answers

    What is the first step to produce a Cash Flow Statement?

    <p>Cash Receipts from Customers</p> Signup and view all the answers

    In financing activities, cash flow is derived from changes in ______ and borrowings.

    <p>equity</p> Signup and view all the answers

    Which of the following is NOT part of cash flows for taxes?

    <p>Interest received</p> Signup and view all the answers

    Which of the following represents the main inflows in Cash flows from Operating Activities?

    <p>Receipts from Customers</p> Signup and view all the answers

    What is a primary outflow in the Cash flows from Investing Activities?

    <p>Purchase of Assets</p> Signup and view all the answers

    Payments to Suppliers are considered a primary inflow in Cash flows from Operating Activities.

    <p>False</p> Signup and view all the answers

    Financing Activities include Proceeds from borrowings and Repayment of Loans.

    <p>True</p> Signup and view all the answers

    What are the main inflows in Cash flows from Financing Activities?

    <p>Proceeds from borrowings and Proceeds from Share issues</p> Signup and view all the answers

    The main inflows in Cash flows from Investing Activities are proceeds from the sale of ______.

    <p>assets</p> Signup and view all the answers

    Match the following Cash Flow categories with their main components:

    <p>Operating Activities = Payments to Employees Investing Activities = Proceeds from sale of assets Financing Activities = Proceeds from Share issues</p> Signup and view all the answers

    Which of the following is a main outflow in Cash flows from Financing Activities?

    <p>Dividends paid</p> Signup and view all the answers

    What are the primary outflows in Cash flows from Operating Activities?

    <p>Payments to Suppliers, Employees, Interest, and Taxation</p> Signup and view all the answers

    Cash flows from Investing Activities mainly include cash movements related to Current Assets.

    <p>False</p> Signup and view all the answers

    What is a primary inflow in Cash flows from Operating Activities?

    <p>Receipts from Customers</p> Signup and view all the answers

    Payments to Suppliers are considered a primary inflow in Cash flows from Operating Activities.

    <p>False</p> Signup and view all the answers

    What constitutes the main outflow in Cash flows from Investing Activities?

    <p>Purchase of Assets</p> Signup and view all the answers

    Cash movements in Financing Activities focus on Non-Current ______ and Owner's Equity.

    <p>Liabilities</p> Signup and view all the answers

    Which of the following options represents the main inflows in Cash flows from Investing Activities?

    <p>Proceeds from Sale of Assets</p> Signup and view all the answers

    Financing Activities include Proceeds from Share Issues.

    <p>True</p> Signup and view all the answers

    List two main outflows in Cash flows from Financing Activities.

    <p>Repayment of Loans and Dividends Paid</p> Signup and view all the answers

    The main outflows in Cash flows from Operating Activities include Payments to Suppliers, Employees, ______, and Taxation.

    <p>Interest</p> Signup and view all the answers

    Match the following cash flow categories with their definitions:

    <p>Operating Activities = Cash movement related to current assets and liabilities Investing Activities = Cash movement related to non-current assets Financing Activities = Cash movement related to non-current liabilities and owner's equity</p> Signup and view all the answers

    Which of the following is NOT a main inflow in Cash flows from Operating Activities?

    <p>Proceeds from Asset Sales</p> Signup and view all the answers

    What is the primary purpose of a Cash Flow Statement?

    <p>To report cash inflows and outflows over a specific period</p> Signup and view all the answers

    Investing activities primarily involve cash transactions related to day-to-day operations.

    <p>False</p> Signup and view all the answers

    What are cash receipts from customers calculated by?

    <p>Accounts Receivable (Beginning) + Total Sales for the Period - Accounts Receivable (End)</p> Signup and view all the answers

    Financing Activities include changes in equity and ______.

    <p>borrowings</p> Signup and view all the answers

    Match the following cash flow activities with their descriptions:

    <p>Operating Activities = Principal revenue-producing activities Investing Activities = Acquisition and disposal of long-term assets Financing Activities = Changes in equity and borrowings Cash Payments to Employees = Payments made for employee wages and salaries</p> Signup and view all the answers

    Which of the following is NOT included in cash flows for dividends received?

    <p>Payments made for operating expenses</p> Signup and view all the answers

    Changes in non-current asset balances help determine cash flows from financing activities.

    <p>False</p> Signup and view all the answers

    Identify what must be ignored when preparing the Cash Flow Statement.

    <p>Non-cash expenses, such as depreciation.</p> Signup and view all the answers

    Cash paid to suppliers is calculated using Accounts Payable (Beginning) + Total Purchases for the Period - Accounts Payable (End) = ______.

    <p>Cash Payments to Suppliers</p> Signup and view all the answers

    Which activity is generally included in investing activities?

    <p>Cash received from selling a company vehicle</p> Signup and view all the answers

    Study Notes

    Overview of Cash Flow Statement

    • AASB 107 mandates cash flow statements in addition to income statements, balance sheets, and equity changes statements.
    • Cash flows are categorized into three main activities: Operating, Investing, and Financing.

    Categories of Cash Flow Activities

    • Operating Activities: Involves principal revenue generation through routine business operations.
    • Investing Activities: Concerns acquisition and disposal of long-term assets, including non-current assets.
    • Financing Activities: Relates to changes in equity and borrowings affecting owners and debt management.

    Preparing a Cash Flow Statement

    • Use the previous and current balance sheets along with the current income statement as sources for information.

    Steps to Produce a Cash Flow Statement

    • Cash Receipts from Customers:

      • Calculate using beginning accounts receivable, total sales, and ending accounts receivable.

    • Cash Paid to Suppliers:

      • Determine using beginning accounts payable, total purchases, and ending accounts payable.

    • Cash Paid to Employees:

      • Take employee expenses from the income statement and adjust for prepaids and accruals.

    • Cash Paid for Other Expenses:

      • Identify other expenses from the income statement and adjust for prepaids and accruals; exclude non-cash expenses like depreciation.

    • Cash Flows for Dividends, Interest, and Tax:

      • Identify and sum cash involved in interest received/paid and income tax paid.

    • Cash for Non-Current Assets:

      • Assess changes in non-current asset balances from the start to the end of the period to determine cash flow.

    • Financing Cash Flows:

      • Evaluate changes in equity and borrowings, including cash from share issues, loans, repayments, and dividend payments.

    Importance of the Cash Flow Statement

    • Highlights detailed cash movement, showing the shift in bank cash balances (e.g., from 100,000to100,000 to 100,000to150,000).
    • Cash movements are explained through inflows and outflows across the three activity categories.

    Cash Flows from Operating Activities

    • Focuses on cash movements reflected in the income statement and current assets/liabilities.
    • Major inflows stem from customer receipts; significant outflows consist of supplier payments, employee payments, interest, and taxes.

    Cash Flows from Investing Activities

    • Examines cash transactions related to non-current assets.
    • Main cash inflows are from asset sales, while cash outflows relate to purchasing assets, like equipment.

    Cash Flows from Financing Activities

    • Concentrates on cash movements involving non-current liabilities and owner’s equity.
    • Inflows primarily arise from borrowing proceeds and share issues, with outflows manifesting as loan repayments and dividends.

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    Description

    This quiz examines the Cash Flow Statement as outlined by AASB 107, which requires businesses to present cash flows alongside income statements, balance sheets, and changes in equity. It covers the three main categories of cash flow activities: operating, investing, and financing activities.

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