What is not needed to prepare a statement of cash flows?
Adjusted trial balance is not generally used in preparing a statement of cash flows.
Format of a cash flow statement
Operational business activities include inventory transactions, interest payments, tax payments, wages to employees, and payments for rent. Any other form of cash flow, such as investments, debts, and dividends are not included in this section.
The cash flow statement differs from the balance sheet and income statement in that it excludes non-cash transactions required by accrual basis accounting, such as depreciation, deferred income taxes, write-offs on bad debts and sales on credit where receivables have not yet been collected.
The correct answer to this question is (b) Retained earnings
Adjustments with respect to the non-cash items such as depreciation, amortization, gain or loss on the sale of assets are added or deducted back to/from the net income.
Before you prepare your cash flow statement, you must have all the basic and relevant financial documents. These include income statements or profit-and-loss statements, balance sheets and statements of equity changes.
Answer and Explanation:
It is broken down into three sections with operational cash flow, investment cash flow, and financing cash flows. Among the choices, the cash flows from taxation is not a category of cash flows.
Cash inflows from operating activities affect items that appear on the income statement and include: (1) cash receipts from sales of goods or services; (2) interest received from making loans; (3) dividends received from investments in equity securities; (4) cash received from the sale of trading securities; and (5) ...
Which of the following is NOT a cash outflow for the firm? depreciation.
It reconciles ending cash balance with the balance as per bank statement is incorrect about the statement of cash flows.
Liquid can flow easily but solids do not flow.
Which of the following is not a cash flow operating activities?
Cash inflows from the sale of property, plant, and equipment is not a typical cash flow under operating activities.
A cash flow statement consists of three sections exploring operating activities, investing activities, financing activities and also features supplemental information in a special section.
Summary. IAS 7 requires an entity to provide a statement of cash flows for an accounting period, which analyses changes in cash and cash equivalents during a period. It requires the cash flows of an entity to be analysed into operating, investing and financing activities.
Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash? Depreciation is a non-cash expense which should not be provided for in the profit and loss account.
Depreciation expense is excluded because it does not represent an actual cash flow; interest expense is excluded because it represents a financing expense. Capital spendingis just money spent on fixed assets less money received from the sale of fixed assets.
The correct option is (c) Discarding an asset that had not yet been fully depreciated. As discarding an asset that had been fully depreciated, would not result in any impact on the cash and cash equivalent of the business. This cannot be considered as a cash outflow and would not be reported in the cash flow statement.
Cash flow from operating activities does not include long-term capital expenditures or investment revenue and expense.
Expert-Verified Answer
In an accounting context, cash includes currency and coins, balances in checking and savings accounts, but not accounts receivable from customers, which represents money that is owed to a business but has not yet been received.
Instead, financing and investing activities help the company function optimally over the longer term. This means that the issuance of stock or bonds by a company are not counted as operating activities. Key operating activities for a company include manufacturing, sales, advertising, and marketing activities.
These non-cash activities may include depreciation and amortization, as well as obsolescence. Property, plant and equipment resides on the balance sheet. These items are taken on the income statement in small increments called depreciation or amortization.
Which of the following not included in cash and cash equivalents?
Cash and equivalents do not include investments in liquid securities like bonds, stocks, and derivatives. Even though such assets can be quickly converted to cash (usually within three days), they are nonetheless excluded. On the balance sheet, the assets are classified as investments.
What's Not Included in Cash Equivalents. Investments in liquid securities, such as stocks, bonds, and derivatives, are not included in cash and equivalents. Even though such assets may be easily turned into cash (typically with a three-day settlement period), they are still excluded.
