Question 1

Which heading on the statement of cash flows shows the purchase of non-current assets?

Accepted Answer

The purchase of non-current assets is shown under investing activities on the statement of cash flows, as it involves the investment in long-term assets that are expected to bring future economic benefits.

Question 2

How does the statement of cash flows show the cash flow from working capital accounts?

Accepted Answer

The statement of cash flows shows the cash flow from working capital accounts as adjustments in non-cash working capital accounts. These adjustments are part of the cash flows from operating activities, reflecting changes in accounts such as receivables, inventory, and payables.

Question 3

Which heading on the statement of cash flows shows the payment of dividends?

Accepted Answer

The payment of dividends is shown under financing activities on the statement of cash flows because it relates to the financing of the business and changes in its equity.

Question 4

The statement of cash flows shows the following information. What is the year-end cash balance?
Increase in cash $ 5,000
Cash, beginning of year 18,000

Accepted Answer

The year-end cash balance is calculated by adding the increase in cash ($5,000) to the cash at the beginning of the year ($18,000), which equals $23,000.

Question 5

The statement of cash flows shows the following information. What is the cash provided by financing activities?
Payment of dividends $ 47,500
Proceeds from issue of long-term debt 200,000
Proceeds from issue of share capital 15,000

Accepted Answer

Cash provided by financing activities = Proceeds from issue of long-term debt + Proceeds from issue of share capital - Payment of dividends= 200,000 + 15,000 - 47,500= $167,500

Question 6

The statement of cash flows shows the following information. What is the cash from operating activities?
Profit for the year $ 97,500
Depreciation 40,000
Adjustments in non-cash working capital accounts (11,000)

Accepted Answer

The cash from operating activities is calculated by starting with the profit for the year, then adding back non-cash expenses (such as depreciation), and adjusting for changes in working capital. Therefore, $97,500 (profit) + $40,000 (depreciation) - $11,000 (adjustments in working capital) = $126,500.

Question 7

What is the source of the cash balance at the beginning and end of the year, as shown on the statement of cash flows?

Accepted Answer

The cash balance at the beginning and end of the year, as shown on the statement of cash flows, comes from the statement of financial position (balance sheet). This statement provides a snapshot of a company's financial position at a specific point in time, including its cash and cash equivalents.

Question 8

What heading on the statement of cash flows shows the profit for the year as a cash inflow?

Accepted Answer

The profit for the year is shown under operating activities on the statement of cash flows, as this section reflects the cash inflows and outflows from the company's primary business operations, including the net income adjusted for non-cash items and changes in working capital.

Question 9

How does the purchase of non-current assets appear on the statement of cash flows?

Accepted Answer

The purchase of non-current assets is recorded as an outflow of cash under investing activities on the statement of cash flows, reflecting the use of cash to acquire long-term assets that will be used in the business.

Question 10

Which of the following is shown on the statement of cash flows?

Accepted Answer

The statement of cash flows shows cash inflows and outflows from operating, investing, and financing activities. Operating activities include transactions and events that affect net income, thus D) operating activities is the correct answer.

Question 11

The statement of cash flows shows the following information. What is the impact on cash?
Cash inflow from operating activities $ 126,500
Cash inflow from financing activities 167,500
Cash outflow for investing activities 290,000

Accepted Answer

The net impact on cash is calculated by adding the inflows and subtracting the outflows: $126,500 (operating) + $167,500 (financing) - $290,000 (investing) = $4,000 increase.

Question 12

What adjustments are made to calculate cash flow from operating activities?

Accepted Answer

Depreciation is a non-cash expense, so it is added back to net profit when calculating cash flow from operating activities to reflect the actual cash generated.

Question 13

What is the source of the cash at the beginning of the year on the statement of cash flows?

Accepted Answer

The cash at the beginning of the year on the statement of cash flows comes from the previous year's statement of financial position (balance sheet), reflecting the closing balance of cash from the end of the prior year.

Question 14

How is depreciation shown on the statement of cash flows?

Accepted Answer

Depreciation is a non-cash expense and is added back to net income in the operating activities section of the cash flow statement to reconcile net income to net cash provided by operating activities.

Question 15

What source of financing is shown under financing activities?

Accepted Answer

Issuing share capital to buy land is a financing activity as it involves raising funds through equity to finance the purchase of an asset.

Question 16

What is the source of the cash at the end of the year on the statement of cash flows?

Accepted Answer

The source of the cash at the end of the year on the statement of cash flows is the current year's statement of financial position. This statement reflects the company's financial status at the end of the year, including its cash and cash equivalents.

Question 17

Which of the following is included in the "adjustments in non-cash working capital accounts"?

Accepted Answer

Adjustments in non-cash working capital accounts typically involve changes in current assets and current liabilities, not long-term financing activities. A decrease in trade and other payables is a change in a current liability, thus it is included in the adjustments for non-cash working capital.

Question 18

Which of the following results in a cash inflow?

Accepted Answer

The answer of Which of the following results in a...

Question 19

Which of the following is a cash outflow?

Accepted Answer

The answer of Which of the following is a cash...

Question 20

What is the source of the profit for the year?

Accepted Answer

The statement of income (also known as the income statement or profit and loss statement) is the financial statement that reports a company's financial performance over a specific accounting period, primarily focusing on revenues and expenses to determine the net profit or loss for the period.

Quiz 3: Statement of Cash Flows