Topic 11 statement of cash flows PDF

| PURPOSE OF THE STATEMENT OF CASH FLOWS  cash receipts  cash payments  net change in cash resulting from operating, investing and financing activities.. | SALES REVENUE + BEGINNING

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STATEMENT OF CASH FLOWSTOPIC 11

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Topic 11

Learning

Objectives

On completion of this topic, you should be able to:

1 Indicate the main purpose of the statement of cash flows.

2 Distinguish among operating, investing and financing

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PURPOSE OF THE STATEMENT OF CASH FLOWS

 cash receipts

 cash payments

 net change in cash resulting from

operating, investing and financing activities.

 What was the change in the cash

balance during the period?

 Is the entity generating sufficient cash

flows from operations to meet cash requirements?

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CASH FLOW ACTIVITIES

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2018 2018 2017 Cash Flows from Operations

Sales Revenue $945 Current Cash paid to suppliers (299)Less Cost of Sales 280 Cash $60 $70 -10 Cash paid to employees (172)

Inventory 124 90 34 Cash paid for insurance (37)Less Expenses Prepaid Insurance 16 5 11 Net Cash flows from operating activities $328

Depreciation expense 70 Total Current Assets $380 $360

Insurance expense 26 Noncurrent Assets Cash Flows from Investing

Salaries & Wages expense 175 Property Plant and Equipment 1360 700 660 Cash paid for equipment (660)General selling & administrative expenses 122 393 Less Accumulated Depreciation (160) (90) Net Cash Flows from investing activities (660)

*Note: Amount paid off loan (in thousands) $60 LIABILITIES Repayments of long-term loan (60)

Current Liabilities Proceeds from share issue 374Accounts Payable 90 75 15 Dividends paid (122)Salaries Payable 17 14 3 Net Cash Flows from financing activities 322

Other Payables 18 20 2 

Total Current Liabilities $125 $109 Net Decrease in cash (10)

Opening cash balance 70Noncurrent Liabilities Closing cash balance 60Long-term Loan* 500 430 70 

TOTAL SHAREHOLDERS' EQUITY $955 $431

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SALES REVENUE

+ BEGINNING Accounts Receivable – ENDING Accounts Receivable OR + decrease in AR or – increase in AR

Cash Receipts from Customers

calculate cash flows from operations CALCULATING CASH RECEIPTS FROM CUSTOMERS

PREPARING A STATEMENT OF CASH FLOWS - DIRECT

Cash Flows from Operations

 Net Cash flows from operating activities $328

For the Year ended 30 June 2018

Flight Central Ltd Statement of Cash Flows

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calculate cash flows from operations CALCULATING CASH RECEIPTS FROM CUSTOMERS

Gross Profit $665 Accounts Receivable 180 195 -15  Cash paid to others (124)

For the year ended 30 June 2018 As at 30 June 2018 For the Year ended 30 June 2018

Flight Central Ltd Flight Central Ltd Flight Central Ltd Income Statement Balance Sheet Statement of Cash Flows

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of Sales (COS)*

BEGINNING Inventory + ENDING INVENTORY

-= Accrual

Basis Purchases

+ BEGINNING Accounting Payable - ENDING Accounts Payable

= Cash paid to suppliers for purchases

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calculate cash flows from operations - CALCULATING CASH PAID TO SUPPLIERS

Sales Revenue $945 Current Cash paid to suppliers (299)Less Cost of Sales 280 Cash $60 $70 -10  Cash paid to employees (172)

Inventory 124 90 34  Cash paid for insurance (37)Less Expenses Prepaid Insurance 16 5 11  Net Cash flows from operating activities $328

Salaries & Wages expense 175 Property Plant and Equipment 1360 700 660  Cash paid for equipment (660)General selling & administrative expenses 122 393 Less Accumulated Depreciation (160) (90) Net Cash Flows from investing activities (660)

Current Liabilities Proceeds from share issue 374Accounts Payable 90 75 15  Dividends paid (122)

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+ BEGINNING Salaries Payable – ENDING Salaries Payable

= Cash paid to employees

CALCULATE CASH FLOWS FROM OPERATIONS - cash paid to employees &

other suppliers of services (Payables)

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Salaries & wages Expense $175 000

Add : Beginning salaries payable 14 000

Current Liabilities Proceeds from share issue 374Accounts Payable 90 75 15  Dividends paid (122)Salaries Payable 17 14 3  Net Cash Flows from financing activities 322

Other Payables 18 20 2 

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Other Expenses

+ BEGINNING Other payables–

ENDING Other Payables

= Cash paid to other suppliers

CALCULATE CASH FLOWS FROM OPERATIONS - cash paid to employees & other suppliers of services (Payables)

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Add : Beginning other payables 20 000

Cash paid to other suppliers $124 000

Current Liabilities Proceeds from share issue 374Accounts Payable 90 75 15  Dividends paid (122)Salaries Payable 17 14 3  Net Cash Flows from financing activities 322

Other Payables 18 20 2 Total Current Liabilities $125 $109 Net Decrease in cash (10)

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Expense for service (e.g

Insurance)

- BEGINNING Prepaid expense + ENDING Prepaid expense

= Cash paid for service

CALCULATE CASH FLOWS FROM OPERATIONS - cash paid to other suppliers

of services (prepayments)

Cash received from customers $960 Cash paid to suppliers (299)

 Cash paid to employees (172)

 Cash paid to others (124)

 Cash paid for insurance (37)

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Less : Beginning prepayments (5 000)

Cash paid to insurance supplier $37 000

Gross Profit $665 Accounts Receivable 180 195 -15  Cash paid to others (124)

General selling & administrative expenses 122 393 Less Accumulated Depreciation (160) (90) Net Cash Flows from investing activities (660) NET PROFIT $272 Total Noncurrent Assets $1,200 $610

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Acquisition and disposal of

non-current Assets

 Amounts paid for new assets

 Proceeds received for assets sold

 Eliminate effect of non-cash

transactions

 Depreciation

 Gains/losses on disposal

Receipts from investments

Less Accumulated Depreciation (160) (90) Net Cash Flows from investing activities (660)

Total Noncurrent Assets $1,200 $610

TOTAL ASSETS $1,580 $970 Cash Flows from Financing

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Proceeds from loan 70

Current Liabilities Dividends paid (122)Accounts Payable 90 75 15 Net Cash Flows from financing activities 322

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EXAMPLE STATEMENT OF CASH FLOWS

Gross Profit $665 Accounts Receivable 180 195 -15 Cash paid to others (124)

General selling & administrative expenses 122 393 Less Accumulated Depreciation (160) (90) Net Cash Flows from investing activities (660) NET PROFIT $272 Total Noncurrent Assets $1,200 $610

TOTAL ASSETS $1,580 $970 Cash Flows from Financing

LIABILITIES Proceeds from share issue 374

Noncurrent Liabilities

TOTAL LIABILITIES $625 $539 NET ASSETS $955 $431

SHAREHOLDERS' EQUITY

TOTAL SHAREHOLDERS' EQUITY $955 $431

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FLOWS – Indirect Method

Under the INDIRECT method the

accrual based profit figure is

adjusted to get the cash flow from

operations by adding or subtracting:

 adjustments to remove accruals

for non-cash expenses or

revenues arising from

noncurrent asset changes such

as depreciation expense and

profit or loss on the sale of

noncurrent assets;

 adjustments to remove

accruals from uncollected

revenues, revenues received in

advance, prepaid expenses and

unpaid expenses represented

by changes in non-cash working

Deduct

Increase in inventory (34) Increase in prepaid insurance (11) Decrease in other payables (2)

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