ADM 1340 Lecture Notes - Lecture 13: Accounts Receivable, Income Statement, Income Tax

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Describe purpose & content of statement of cash flows. Use state(cid:373)e(cid:374)t of (cid:272)ash flo(cid:449)s to e(cid:448)aluate a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s li(cid:395)uidit(cid:455) & sol(cid:448)e(cid:374)(cid:272)(cid:455) Purpose & content of statement of cash flows. Purpose = help investors, creditors, & other assess: reasons for difference btw/ profits & cash provided or used by operating activities, co(cid:373)pa(cid:374)(cid:455)"s a(cid:271)ilit(cid:455) to generate future cash flows. Investing & financing transactions during period, or why assets & liabilities have increased or decreased. Information reported in statement of cash flows includes: cash receipts (sale), cash payments (buy), net change in cash. Statement of cash flows classifies cash receipts & cash payments into 3 types of activities: (1) operating activities (2) investing activities (3) financing activities. If investment is short-te(cid:396)(cid:373) & t(cid:396)adi(cid:374)g, it"d (cid:271)e classified as operating & if investment is long-te(cid:396)(cid:373) & (cid:374)ot t(cid:396)adi(cid:374)g, it"d (cid:271)e (cid:272)lassified as i(cid:374)(cid:448)esting. Issue of shares to purchase assets: conversions of debt into equity, exchanges of property, plant, & equipment.

Related Questions

Choose the correction answer

15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.

T F

16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.

T F

17. Anobjective of the statement of cash flows is to

a. disclose changes during the period in all assetand all equity accounts.

b. disclose the change in working capital during theperiod.

c. provide information about the operating,investing, and financing activities of an entity during aperiod.

d. None of these answers are correct.

18. Theprimary purpose of the statement of cash flows is to provideinformation

a. about the operating, investing, and financingactivities of an entity during a period.

b. that is useful in assessing future cash flowprospects.

c. about the cash receipts and cash payments of anentity during a period.

d. about the entity's ability to meet itsobligations and to pay dividends.

19. Cash equivalents are

a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.

b. investments with original maturities of threemonths or less.

c. readily convertible into known amounts ofcash.

d. All of these answers are correct.

20. Xanthe Corporation had the following transactions occur in thecurrent year:

1. Cash sale of merchandise inventory.

2. Sale of delivery truck at book value.

3. Sale of Xanthe common stock for cash.

4. Issuance of a note payable to a bank forcash.

5. Sale of a security held as anavailable-for-sale investment.

6. Collection of loan receivable.

How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?

a. Five items

b. Four items

c. Three items

d. Two items

erinchimpanzee626

Could you please help me in the following questions. Could youplease take a screenshot of the final cash flow statement etc.Cheers

Regards

Adam

Statement of Cash Flows

You are provided the following financial information for TomHill Form Works, a company specialising in the production ofmoon-sized Imperial battle stations:

Tom HillForm Works

COMPARATIVE BALANCE SHEETS

AS AT 30th JUNE

	2015		2014
	$'000's		$â000's
Current Assets
Cash on Hand	35		12
Cash at Bank	209		98
Accounts Receivable (net)	58		54
Inventory	310		330
Prepaid Expenses	35	647	33	527
Non-Current Assets
Planet destroying Laser	840		760
less Acc. Depreciation	440	400	408	352
Buildings		80		180
Total Assets		1 127		1 059

Current Liabilities
Bank Overdraft	20		-
Accounts Payable	64		80
Accrued Stormtroopers wages	63		89
Loan	12	159	-	169
Non-Current Liabilities
Loan		18		-
Total Liabilities		177		169
Net Assets		950		890

Equity
T.Hill, Capital		950		890

Tom Hill Form Works

INCOME STATEMENT

FOR THE YEAR ENDED 30th JUNE2015

		$'000's

Net Sales			1 990
COS	1 300
Less: Discount received	5		1 295
Gross Profit:			695
Other Revenue:
Gain on sale of building			60
Interest received			8
			763
Expenses:
Selling & Admin Expense	517
Doubtful Debts Expense	9
Interest Expense	12		538
Profit			225

Additional Information:

Selling & Admin Expense includes depreciation expense of$32,000.

The owner T.Hill, contributed $20,000 during the year

A new planet destroying laser was purchased by extending theloan, and paying the balance in cash

A building which had originally cost $100,000 was sold for$160,000 cash, making the business a gain of $60,000

REQUIRED:

Answer this question on the pro formaprovided

a. Using the template provided below, prepare a statement ofcash flows. Show all calculations on the proforma.

b. The owner of Tom Hill Form Works canât understand why the cash flowfrom operations is so different to the profit figure. As he has atendency to react quite badly to negativenews, carefully explain to Mr Hill at least two ofthe factors that may be causing thisdifference.

c. Explain what information is provided by a Statement of Cash Flowthat is not provided by the other General Purpose Financial Reportsyou have been introduced to in this unit (Income Statement,Statement of Changes in Equity & BalanceSheet)?

Tom Hill Form Works

Cash Flow Statement

FOR THE YEAR ENDED 30thJUNE 2015

	$â000	$â000
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers & employees
Cash generated by operations
Interest received
Interest paid

Cash Flows from Investing Activities
Proceeds from sale of buildings
Payment for Laser

Cash Flows from Financing Activities
Contribution by owner
Drawings

Net increase / decrease in cash held
Cash at the beginning of the year
Cash at the end of the year

ALL WORKINGS MUST BE PRESENTED BELOW OR THE CASHFLOWSTATEMENT WILL RECEIVE NO MARKS

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ADM 1340 Lecture Notes - Lecture 13: Accounts Receivable, Income Statement, Income Tax

ADM 1340 Full Course Notes

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