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A Level Accounting

Statement of Cash Flows

QuestionAnswer
State the formula to work out Profit from Operations Increase in Retained Profit + Dividends paid + Tax Provision from Income Statement +Finance Costs = Profit from Operations
State what happens in the SOCF with regards to profit/loss on disposal Any profit on disposal needs to be deducted. Any l oss on disposal will need to be added.
State what happens in the SOCF with regards to non-cash expenses Any non cash expenses need to be added e.g. depreciation is a non cash expense because it is in the Profit and Loss Account.
State the formula to work out missing asset at cost figure Balance bd +Additions + Revaluation Charge – Balance c/d = Missing Asset at Cost Disposal figure
Explain what would happen in the SOCF with a decrease in inventories It is added in SOCF
Explain what would happen in the SOCF with an increase in inventories It is deducted in SOCF (money is tied up in stock)
To help you remember the layout for the Operating Activities section of the Statement of Cash Flows I gave you the mnemonic P uff D addy D ied I n R ome P osing C aught I n T he N ude (State which each element stands for in the mnemonic) Puff ( P rofit from Operations) Daddy( D epreciation) D ied ( D isposal) I n( I nventories) R ome( R eceivables) P osing(Payables) C aught( C ash from Operations) I n( I nterest Paid) T he( T ax) N ude( N et Cash from Operating Activities)
Explain what would happen in the SOCF with an increase in payables It is added in SOCF (keeping cash in business longer/Cash up)
Explain what would happen in the SOCF with a decrease in payables It is deducted in SOCF (business is paying creditors faster so cash is going out of business faster)
Explain what would happen in the SOCF with an increase in receivables It is deducted in SOCF (cash is taken longer to be collected/paid and come into the business)
Create the Asset T Account like you do when you are doing disposal of asset. The only difference is you need to add revaluation to the Dr side and include depreciation on Cr side
Explain what would happen in the SOCF with a decrease in receivables It is added in SOCF (cash is is being collected/paid faster)
Dividends Received/Interest Received/Income from Sales on Non Current Assets all appear in what section of the SOCF? Investing Activities
State the formula for Cash Flow from Investing Activities section of the SOCF Purchase on non-current assets + Proceeds from disposal of non current assets
State the formula for Cash Flow from Financing Activities section of the SOCF Proceeds from issued share Capital + Proceeds from Long Term loans - Dividends paid - Loan Repayments - Redemption of Debentures (payment of debentures to debenture holders)
State the formula for Number of Shares Ordinary Share Capital/Nominal Value
State the formula to work out missing Depreciation figure for Cash Flow from Investing Activities Bal b/d of non-current asset + Additions + Revaluation - Disposal - Bal c/d = Depreciation
State the formula for the Rights Issue of Shares Total Number of Shares (Original Share amount + Bonus Issue)/Rights Issue amount x Share Price at Premium (Nominal Value + Premium Value)
State the formula for Bonus Issue of Shares Number of Shares/Bonus Issue amount x Share Price at Nominal Value
State the formula to calculate NBV and Profit on Disposal Cost of asset - Depreciation = NBV Sale Price - NBV = Profit or Loss
State how to work out missing depreciation figure for Cash Flow from Investing Activities You can use an Asset T Account like the one opposite
Explain how to calculate the missing Taxation figure for Operating Activities section of the SOCF The easiest thing to do is to create a Taxation T Account. Remember that any Taxation paid on profit goes onto the Cr side. Bal b/d will be Cr side and Bal c/d will be on Dr side. Missing figure after you have balanced off will be the Tax figure you need.
Created by: durquhart1
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