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Flashcards in Cash Flows Deck (28)
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1

Bond premium amortization on long term debt - how is this shown in the operating activities section using the indirect method?

Deduction from net income

2

Bond discount amortization on long term debt - how is this shown in the operating activities section using the indirect method?

Addition to net income

3

Premium or Discount amortization tip

DA - DISCOUNT ADD
PD - PREMIUM DEDUCT

4

Cash paid for interest in bonds is reported in

Operating activities

5

Interest received and paid

Always operating activities

whether they are related to AVS, trading or HTM

6

Dividends received and paid

RECEIVED - operating
PAID - financing

7

Long term debt - bonds issued by entity
issuance and retirement

financing

8

Loans made by entity to others
disbursement and collection proceeds

Investing
(interest received i operating)

9

Acquisition and disposal of AVS

investing

10

Acquisition and disposal of trading securities

operating

11

Acquisition and disposal of PPE and intangibles

investing

12

Cash outflow and inflow related to Notes Receivable

investing

13

All borrowings and repayment of loans
Loans payable

financing

14

All Notes payable transactions

financing

15

Financing

issuance/payment on retirement of bonds
issuance/reacquisition of treasury stocks
issuance of shares of stocks
borrowing/repayment of loan
loan payable
notes payable
DIVIDENDS PAID

16

Investing

LIP - loans, investments, PPE
loans granted to others - investment
AVS
intangibles
Notes receivables

17

Operating

sales, purchases
all interests received and paid
dividends - received only
trading securities
income taxes

18

Indirect method - operating activities

Net Income
Add/Deduct non cash items in IS
Premium amort - deduct
Discount amort - add
Increase/Decrease in AR, AP, inventory, allowance for BD, interest payable, tax payable, deferred tax liabitlity, prepaid expenses

19

Direct method - operating activities

Cash collection from sales
Cash paid for purchases
cash paid for expenses
cash paid/received for interest
cash paid/received for taxes
cash paid/received for trading securities transactions

20

Is cash flow per share disclosed in the Income Statement?

NO

21

SUPPLEMENTAL DISCLOSURES - direct method

* schedule to reconcile net income to cash flow provided/used by operations

*schedule of non cash financing and investing activities
*transactions without effect on cash:
- conversion of bonds to stock
- purchased financed entirely by loan (no actual
cash received or paid)

22

SUPPLEMENTAL DISCLOSURES - indirect method

1. all cash payments for interest and income
taxes

2. schedule of non cash investing and financing
activities

23

IFRS cash flows

1. direct or indirect method ok
2. Indirect method - use modified indirect method
format differs from GAAP - all revenues and
expenses in one group then total; under
that are the changes in working capital
accounts
3. Bottom whould show a reconciliation of the
cash flows amount VS amounts in the
statement of financial position

4. interests and dividends received - are
OPERATING OR INVESTING
5. interest and dividends paid - are OPERATING
AND FINANCING

6. ok to choose but should be consistent

7. income taxes paid - disclosed separately in
operating activities

8. cash flows from other taxes - depends in the
transaction they are related to

9. non cash activities - DISCLOSE IN THE NOTES

10. if direct method is used -NO RECONCILIATION
at the bottom required - this is only shown
in the NOTES TO FS

24

In IFRS, interest and dividends received are reported in

OPERATING OR INVESTING

25

In IFRS, interest and dividends paid are reported in

OPERATING OR FINANCING

26

IFRS notes to financial statements should include:

Related to cash flows:

1. Statement reconciling net income to cash flow
2. Significant non cash activities for cash flows

Other disclosures:

3. Information about the basis of preparation of
FS and policies used

4. info required by IFRS that is not presented
elsewhere in the FS

5. additional info not presented elsewhere but relevant to the understanding of the FS

27

IFRS format review page 25-15

practice

28

IFRS - bank overdraft cash advance

operating activities