活动结束Issue 1 Disclosure: cash flow statements
1.理论物理学家General format of cash flow statement:
Cash Flow Statement
for the year ended 30 June 2006
Cash flows from operating activities
Cash receipts from customers+
Cash paid to suppliers and employees-
Cash generated from operations
Interest paid-
Income taxes paid-
Net cash ud in operating activities
Cash flows from investing activities
Purcha of investments-
Purcha of property, plant and equipment-
Proceeds from sale of equipment+
Interest received+
Dividends received+
Net cash ud in investing activities
Cash flows from financing activities
Proceeds from issue of share capital+
Proceeds from long-term borrowings+
Repayment of borrowings-
Dividends paid-
Net cash ud in financing activities
Net increa (decrea) in cash and cash equivalents+/-
Cash and cash equivalents at beginning of period+
Cash and cash equivalents at end of period+
个人自传300字2.As cash flow statement is introduced, what is meant by the term ‘cash’?
Definition of cash is important becau cash cannot generate cash flow in the context of preparing a cash flow statement and cash should be recorded in ‘Cash and cash equivalents at beginning of period’.
Cash compris cash on hand and demand deposits.
Cash equivalents are short-term highly liquid investments that are readily convertible into
known amounts of cash, and which are subject to an insignificant risk of changes in value.
Examples: bank and non-bank bills, money market deposits clo to maturity, investment within a term of 3 months or less.
Bank overdraft is treated as a financial activity.
Account receivable (subject to adjustment by bad debts) and equity curities (high risk in changes in value) are excluded from the definition of cash.
3.Classification of cash flow activities
英语教学随笔Operating activities | Associated with revenues and expens | E.g. to lenders for interest and borrowing costs |
Investing activities | Associated with movement in non-current asts and investment | E.g. to sale and purcha of shares and debenture of other entities |
Financing activities | Associated with movement in non-current liabilities and equity | E.g. to issue shares, debenture, borrowings, share buy-backs, dividend paid for the company |
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(Note: you need to make clear whether the payment or receipt is for our own company or third parties)
4.Preparing the cash flow statement
Step 1: Cash flows from operating activities
There are 2 methods which can be ud – direct method and indirect method
Direct method is bad on individual item in income statement. Major class of revenues are shown as gross cash inflows from operations, and expens are shown as gross cash outflows from operations. The information necessary to determine the operating cash flows is obtained by adjusting sales, cost of sales and other items in the accrual-basis IS for non-cash items and items not related to operating activities.
Under direct method, each item is adjusted from accrual basis to cash basis. Certain items, such as depreciation and amortisation of non-current asts and gains/loss on non-current asts dispod of, are excluded, becau they have no effect on cash flow.
Indirect method is bad on after-tax profit in income statement. The accrual-basis profit is adjusted to a cash-basis profit by making adjustments for non-cash items ud in the determination of profit. Added back to profit are the effects of all deferrals of cash inflows (deferred income) and outflows (prepayment), and deducted are all accruals of expected future cash inflows (accrued income) and outflows (accrued expen). The deferrals and accruals of future cash flows are reflected in the changes in the balance of asts and liabilities relating to operating activities. (This method is similar to what is done in preparing tax).
Both methods are permitted under IAS7.
A.Cash receipts from customers
Beginning Accounts Receivable |
+ Credit sales |
-Bad debts written off |
-Discount allowed |
= Total Accounts Receivable |
-Ending Accounts Receivable |
= Cash receipts from customers |
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Bad debts written off is actually A/R written off in UK (Dr Provision for doubtful debts/Cr AR)
The point is the balance of the allowance for doubtful debts account must not be netted off against the accounts receivable balance. We must u bad debts written off.
Beginning Allowance + Bad debts – Bad debts written off = Ending Allowance |
Bad debts written off = Beginning Allowance + Bad debts – Ending Allowance |
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B.Cash paid to suppliers and employees (and other expens)
For cash paid to suppliers:
Beginning accounts payable |
+ Credit purchas |
-Discount received |
= Total accounts payable |
-Ending accounts payable |
= Cash paid to suppliers心事 |
世界标志性建筑 |
But credit purcha is not shown in IS. Only cost of sales can be obtained directly from IS.
