Financing activity cash flows relate to cash flows arising from the way the entity is financed. As explained by examiner, some students spent a disproportionate of time in cash flow statement in their SBR exam. QUESTION AND ANSWER FOR JUNE 2018 PUBLIC SECTOR IN FINANCIAL MANAGEMENT PAPERS . During the year the tax charged in the statement of profit or loss was $100. Problem 1: The bank balance of a business firm has increased during the last financial year by Rs.1,50,000. ACCA Financial Reporting (FR) - Statement of cash flows (IAS 7) - Practice Questions - Chapter 4 Free ACCA Financial Reporting (FR) Tests. It is necessary to reconcile the opening tax liability to the closing tax liability to reveal the cash flow – the tax paid - as the balancing figure. A company can reward investors through script dividends without paying out any cash. This topic is examined in much more depth in the FR examination than it is at FA. A statement of cash flow classifies and presents cash flows under three headings: (i) Operating activities The opposite is applicable for trade payables. It is the balancing figure and explains why the actual year-end tax liability is smaller than the sub-total, This is the closing balance of the tax liability. Accounting policies, changes in accounting estimate and errors (IAS 8), Chapter 11. Consolidated statement of financial position, Chapter 24. 9. Conversely, decreases in inventory and trade receivables are added back to the profit before tax. There are two different ways of starting the cash flow statement, as IAS 7, Statement of Cash Flows permits using either the 'direct' or 'indirect' method for operating activities. Note that the cash proceeds ffrom the disposal of PPE ($20) would be shown separately as a cash inflow under investing activities. At the start of the accounting period the company has a tax liability of $50 and at the reporting date a tax liability of $90. Log in, Chapter 3. 3(b) Interpret cash flow statement to assess performance and position of an entity. During the same period it issued shares of Rs.2,00,000 and redeemed debentures of Rs.1,50,000. With our 1.8 minute per 1 mark rule, you only need to spend 21.6 minutes in cash flow question in SBR exam but if under P2 exam, it’s 63 minutes! Examples of investing cash flows include the cash outflow on buying property plant and equipment, the sale proceeds on the disposal of non-current assets and any cash returns received arising from investments. The first is the direct method which shows the actual cash flows from operating activities – for example, the receipts from customers and the payments to suppliers and staff. As before, to ascertain the cash flow – in this case dividends paid - we can reconcile an opening to closing balance – in this case retained earnings. OTQs will only appear in computer-based exams but these questions will still provide valuable practice for all T 9. Answer (b) indirect method standard questions (and answers) to practice on. T 2. Imagine a … 1.Cash Flow Statement Cash flow statement is a statement showing the changes in financial position of a business concern during different intervals of time in terms of cash and cash equivalents. C Financial statements C1 Cash flow statements Chapter 21 C2 Tangible non-current assets Chapter 5 C3 Intangible assets Chapter 6 C4 Inventory Chapter 12 C5 Financial assets and financial liabilities Chapter 14 C6 Leases Chapter 16 C7 Provisions, contingent liabilities and contingent assets Chapter 13 C8 Impairment of assets Chapter 7 At last, make total of changes in all activities and added opening Bank and Cash balance on it. F 8. Decrease in receivables B. The revaluation gain increases PPE without being a cash flow. Non-current assets (IAS40) Chapter 6. T 7. This means that the figures at the start of the cash flow statement are not cash flows at all. Question 4: IASB Framework / Rebound. Let us see if you can answer the question. Having a good understanding of the format of the statement of cash flows is key to a successful attempt at these questions. Preparation of the statement of cash flows in accordance with IAS 7 The statement of cash flows is one of the financial statements required to be prepared by an entity in terms of IAS 1 Presentation of financial statements. C. Pays a larger than average dividend. Financial performance (profitability), Chapter 23. Operating activities can be presented in two different ways. Net cash from/used in financing activities. It is relevant to the FA (Financial Accounting) and FR (Financial Reporting) exams. The double entry for depreciation is a debit to statement of profit or loss to reflect the expense and to credit the asset to reflect its consumption. 4(a) Qualitative characteristics of financial statements and IFRS disclosure requirements. Cap., Debenture, Bank Loan, Dividend and Interest paid etc. ADVERTISEMENTS: Here is a compilation of top nine problems on cash flow statements along with its relevant solutions. Investing activity cash flows are those that relate to non-current assets including investments . ... 19 IAS 7 (Revised): Statements of Cash Flows 103 20 Interpretation of Accounts – Ratio Analysis 113 21 IAS 33 Earnings Per Share 119 ... Free ACCA notes t Free ACCA lectures t Free ACCA tests t Free tutor support t Studyuddies t ACCA forums Statement of cash flows (IAS 7), Chapter 8. Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes in value. During the year depreciation of $50,000 and amortisation of $40,000 was charged to profit. T 5. 3(a) Prepare cash flow statements. 17 Group statements of cash flows 413 Part D Performance reporting 18 Performance reporting 437 19 Current developments 495 20 Reporting for specialised entities 511 21 Reporting for small and medium-sized entities 529 Exam question and answer bank 539 Mathematical tables 627 Index 631 Review form This is the cash receipts from customers. More information on these question types will be available on the ACCA website. Interest paid is $12,000 and taxation paid is $13,000. Impairment loss charged in profit or loss, Increase / decrease in receivables and prepayments, Increase / decrease in trade payables and accruals, Payments to buy PPE / Intangibles / Investments, Proceeds from sale of PPE / Intangibles / Investments, Capital repayment of finance lease obligations. Whether you believe, given your knowledge so far, that does not mean that will. 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