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The following information relates to Questions 98 and 99.
Scents had the following balances in its statement of financial positions as at 30 September 2004 and 2005:
2004 2005
Loan interest accrual $5,000 $3,000
Approved ordinary dividends $20,000 $25,000
10% Loan notes $100,000 $100,000 $100000
Ordinary share capital $150,000 $150,000
8% Preference share capital $50,000 $50,00099) How much will appear in the statement of cash flows for ordinary dividends paid for year ended 30 Sep 2005?
Answer is 20000 and I don’t understand why
Thank you yet again for any help
The amount appearing in the statement of cash flows is the actual cash paid during the year.
When it says that the dividends were approved, it means that the shareholders had agreed them, but not that they had been paid. They would have been paid in the following year.
So….the amount paid in year ended 30 september 2005, will have been the dividend announced (but not paid) in year ended 30 september 2004
2009 2008
Share capital 300000 120000
Share premium 260000 100000a bonus issue of 1 share for every 12 held at 2008 year end occured during year and loan notes 300000 issued at par .net cash inflow from investing.?
1)why we dont consider bonus issue while calculating cash inflow?
interest accrual bf 4900
interest accrual cf 1200
Divident change in equity) 600000
interest receivable 13000what is net cash flow from investing?
while calculating why we dont consider accrual amd divident?
If you look at the format of the Statement of cash flows, you will see that interest paid and dividends paid are appear as items under ‘Cash flows from operating activities’ (not investing activities)
Dear John
but interest accrual is occured but not paid..but it is not interest paid
Precisely – the accrual cannot possibly appear in the statement!! The statement is showing cash paid and received.
Because the accrual changed, there has obviously been interest paid during the year, but this would not appear under Cash flows from investing activities anyway.
John I have more question.
Cash sales 212500
Cash purchases4600
cash expense11200
payables at start of the day
payables at the end
credit purchase
wages and salaries due at the start of the year
wages and salaries due at the end of the year
wages and salaries expense
inventory at the start
inventory at the end
what is cash generated from operations??why we dont take inventory into acount while calculating
It is again because we are wanting to show the cash.
Certainly some of the purchases are still in inventory, but whether or not they have been sold the cash has still been paid.
(You might be confusing the direct and indirect methods. Usually we take the profit (and inventory is taken into account in calculating the profit) but then to get to a cash flow we adjust for the change in inventory. This is the indirect method.
However the alternative (which is what is happening here) is the direct method where instead of taking the profit and adjusting, we look directly at the cash flows.
Aha, i thought like that,
But wanted to define more precisely from you . Thanks
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