Module 24: Statement of Cash Flows

Question 1

Overdraft

Answer 1

Always assume part of cash

Question 2

The direct method - cash receipts from customers

Answer 2

Opening trade receivables + revenue - closing trade receivables

Question 3

Opening trade receivables - bad debts written off

Answer 3

Deduct

Question 4

Opening trade receivables - allowance for receivables

Answer 4

Increase > deduct

Decrease > add

Question 5

The direct method: cash paid to suppliers and employees

Answer 5

Opening payables + purchases and expenses - closing payables

Question 6

Opening and closing payables exclude (2)

Answer 6

Current tax payable

Accrued finance costs

Question 7

Opening and closing payables - include (3)

Answer 7

• trade payables
• accruals less prepayments
• provisions related to operating profit

Question 8

Purchases

Answer 8

Cost of sales + closing inventories - opening inventories

Question 9

Expenses (2)

Answer 9

• Distribution costs

- Administrative expenses

Question 10

Expenses: Depreciation

Answer 10

Add

Question 11

Expenses gain on disposal

Answer 11

Add

Question 12

Expenses loss on disposal

Answer 12

Deduct

Question 13

Expenses - release of deferred income

Answer 13

Add

Question 14

Expenses bad debt

Answer 14

Deduct

Question 15

Expenses - increase in allowance for receivables

Answer 15

Deduct

Question 16

Expenses decrease in allowance for receivables

Answer 16

Add

Question 17

Taxes paid

Answer 17

Opening tax balance + taxation for the year - closing tax balance

Question 18

Opening/ closing tax balance includes (2)

Answer 18

• Current tax payable

- deferred tax liability/ asset

Question 19

Interest paid and received

Answer 19

Opening accrued finance costs/ income + finance costs/ income - closing accrued finance costs/ income

Question 20

Dividends paid

Answer 20

Opening retained earnings + profit for the year + other equity transactions - closing retained earnings

Difference = dividends paid

Question 21

Purchases of PPE

Answer 21

Opening carrying amount 
\+ revaluation increase
- depreciation charge for the year
- carrying amount of disposal 
\+ right of use asset under new lease

Compare to closing carrying amount