904260
Description
Flashcards by Harshad Karia, updated more than 1 year ago
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Created by Harshad Karia
over 10 years ago
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| Question | Answer |
| What are the 3 heading in the cash flow statement? | - Operating Activities - Investing Activities - Financial Activities |
| What is included in the Operating Activities? | - the main revenue-producing activities of the business, together with the payment of interest and tax |
| What is included in the Investing Activities? | - The acquisition and disposal of long-term assets, and other investments |
| What is included in the Financial Activities? | - Receipts from the issue of new shares, payments to repay shares, changes in long-term borrowings, and dividends paid |
| What is the layout for the cash flow statement? | |
| How is a profit on sale of non-current asset recorded? | - In operating activities section (Less) profit on sale of non-current asset -In investing activities section Add proceeds from sale of non-current asset |
| Is 'Revaluation of Non-Current Assets' recorded in the cash flow statement? | - This a non cash item so there is no entry in the cash flow statement |
| Where is 'Revaluation of Non-Current Assets' recorded? | - When a revaluation increases the value of an asset, the value of the asset is increased and the amount is placed to a revaluation reserve in the equity section of the balance sheet where it increases the value of the shareholders' investment in the company |
| what are the Function of the Cash Flow Statement? | - Required to be included as part of a company's financial statements - A Cash Flow Statement uses information from the accounting records (including income statements and balance sheets) to show an overall view of money flowing in and out of a business during an accounting period - This statement explains to the shareholders why, after a profitable year, there is a reduced balance at the bank or a larger bank overdraft at the year end than it was at the beginning of the year |
| What do you do when Assessing Cash Flow Statementin terms of money concepts? | - Uses the money measurement concept. Only items which can be recorded in money terms can be included; also we must be aware of the effect of inflation if comparing one year to the next |
| What do you do when Assessing Cash Flow Statement in terms of operating activities and the cash (used in)/from operations? | - Look for positive cash flows from operating activities section. Look at the sub total 'cash (used in)/from operations' - this shows the cash from revenue-producing activities before the payment of interest and tax |
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