FINM7409 Tutorial 4
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FINM7409
Tutorial 4
AE6.2
You have been trying to explain cash flow statements to your arts major flat mate. He thinks a company that makes a large profit will obviously have a large increase in cash. Complete the following table as a means of explaining to your flat mate why this will not always be the case.
|
|
Effect on profit |
Effect on cash |
Description of transaction |
|
1 |
Increase |
No effect |
|
|
2 |
Decrease |
No effect |
|
|
3 |
No effect |
Increase |
|
|
4 |
No effect |
Decrease |
|
AE6.3
For each item listed, identify the activity and whether it is an inflow, an outflow, or of a non-cash nature.
|
|
Activity |
Cash flow |
|
e.g . Cash received from customers |
|
|
|
(a) Dividends received |
|
|
|
(b) Taxation paid |
|
|
|
(c) Payments to suppliers and employees |
|
|
|
(d) Interest paid |
|
|
|
(e) Purchase of property, plant and equipment |
|
|
|
(f) Bonus issue of shares |
|
|
|
(g) Dividends paid |
|
|
|
(h) Proceeds on sale of investments |
|
|
|
(i) Interest received |
|
|
|
(j) Long-term borrowing |
|
|
|
(k) Goodwill write-down (impairment) |
|
|
|
(l) Profit on sale of equipment |
|
|
AE6.5
Classify each of the following items as:
a) Cash or non-cash
b) If cash, whether an inflow or an outflow
c) If cash, what type of activity (operating, investing, financing)
|
No |
Details |
Cash or non-cash |
Inflow or outflow |
Activity |
|
A |
Credit sales to customers |
|
|
|
|
B |
Cash received from customers |
|
|
|
|
C |
Interest paid |
|
|
|
|
D |
Increase in long-term loan |
|
|
|
|
E |
Advance to employees |
|
|
|
|
F |
Bonus issue of shares |
|
|
|
|
G |
Profit on sale of equipment |
|
|
|
|
H |
Purchase of equipment |
|
|
|
|
I |
Depreciation of equipment |
|
|
|
|
J |
Revaluation upwards of land |
|
|
|
|
K |
Proceeds on sale of equipment |
|
|
|
|
L |
Cash paid to suppliers |
|
|
|
|
M |
Interest received |
|
|
|
AE6.6
You extract the following information on plant and equipment:
|
|
Year 1 |
Year 2 |
|
|
$ |
$ |
|
Statement of financial position |
|
|
|
Assets: Non-current plant and equipment |
67,293 |
76,937 |
|
|
(27,961) |
(32,411) |
|
Statement |
|
|
|
Loss on sale of plant and equipment |
|
3,764 |
|
Depreciation expense – plant and equipment |
|
8,216 |
|
Other: The book value of the plant and equipment sold was $6,179 |
|
|
|
|
|
|
Calculate for the period (Period 2):
a) Cash purchase of plant and equipment
b) Proceeds on sale of plant and equipment
2022-08-31