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Exam 5: The Statement of Cash Flows

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Question 1

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The operating activities section of the Statement of Cash Flows can be prepared using either the direct approach or the indirect approach. Instructions a) List three cash inflows reported under the direct approach. b) List three cash outflows reported under the direct approach. c) List three additions reported under the indirect approach. d) List three deductions reported under the indirect approach.

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The most common type of non-cash item is depreciation expense.

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Question 3

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Concierge Co. had the following activity during 2020: What was the cash flow from financing activities?

Use the following information to answer following questions QUE Ltd had the following activity during 2020: -Craft Co. had the following activity during 2020: What was the cash flow from operating activities?

Use the following information to answer following questions Muzeen Ltd. had the following activity during 2020: -What was the cash flow from financing activities?

Cash equivalents include investments that can be readily converted into cash; investment maturity dates are irrelevant.

How is the cash flows to total liabilities ratio calculated? What does it measure and why is it important?

Accounting standard setters have established three acceptable methods for preparing a Statement of Cash Flows.

How should a gain on the sale of equipment be reflected in the operating section of the Statement of Cash Flows when using the indirect method?

Cash flows from financing activities include

Explain the relationship between the Statement of Cash Flows and the other financial statements, the Statement of Income and the Statement of Financial Position.

A friend who started a business during the last year has come to you with the following statement: "My accountant is preparing our first financial report and she told me one of the statements was a Statement of Cash Flows. She also told me that my business is facing cash flow problems." Instructions Prepare a reply to your friend. Include three causes of cash flow problems and solutions to solve the cash flow problems. Explain how the Statement of Cash Flows will assist in managing the business.

Identify and describe the options available under IFRS for classifying interest and dividends paid and received on the statement cash flows.

A large increase in accounts receivable may indicate that a company is having difficulties collecting its receivables.

The cash-to-cash cycle is the time between when a company pays out cash to purchase goods until those goods are ultimately paid to the supplier.

The cash flows to total liabilities ratio is used to assess company's ability to meet its liability through its operating cash flows.

Explain the differences between the statement of cash flows and the income statement.

The Statement of ___ is used by shareholders to assess company profitability.

The Statement of Income reflects the overall change in cash flows for an accounting period.

Companies can improve their cash flow by