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FA Chapter 14 Questions Statements of Cash Flows

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  3. Hey John,

    Watched your lectures a good 3 – 4 times before I fully understood the concept of Statement of Cash Flows before attempting the questions, and on the final attempt more or less everything fell in to place :). Results: 80% (incorrect Q4)

    For question 4, I had selected that 2 & 3 were incorrect. The reason I selected this was because as far as I’m aware (regarding point 2), on the statement of cash flows it has under financing actives, “Proceeds on Issue of Shares”. I’m comfortable that the proceeds from Rights Issues would be INCLUDED in this amount, and that I wouldn’t be shown separately. However, from the question I interpreted it as would “Rights Issue of shares do not feature in the statement of cash flow, independently”, as they would be consolidated under the “Proceeds of Issue of Shares” and not be shown independently. I guess I just mis-interpreted the question?

    Nevertheless, thank you very much!

    Haroon

  5. Thanks sir for your contribution to the spread of quality knowledge.

    One half of the important journey is to find the right source of knowledge – ACCA. And the other half – the Right educator, Sir John.M

    ?

  6. I finally got a 5/5 after quite some time !

    The content of the lecture seemed quite heavy although well explained, and now am surprised the exercises were sort of quick, lol. Had dreading expectations of long long sums awaiting in the Q&A. 5/5 馃檪

  10. Hi tutor,

    i fell a little confuse in question 4. I have seen you subtract the profit from selling non-current asset when calculating cashflow in the video, so why statement number (4) is not right?

  11. Hi, regarding question 5, I cannot figure out why we reduce the profit on the sale, I would have added it as the sale on profit generates more cash?
    Many thanks in advance!

    • I do not think that you have watched the free lecture on this.

      Cash generated from the sale is shown under cash flows from investing activities, not as cash flows from operating activities.

      Also, the profit is not a cash flow anyway – it is the cash received that is the cash flow.

      I do suggest that you watch the free lectures before attempting the tests. They are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.

      • I assume that you have watched my lectures on Statements of cash flows (otherwise there is of course no point in attempting the test)?

        To get the net cash flow from operating activities on the statement we need to take the operating profit and then adjust it for various items – for some of them we increase the profit and for some we decrease the profit.
        The question wants you to total all of these adjustments and say whether the total ends up being positive (i.e. will be an overall increase to the profit) or if it ends up being negative (i.e. an overall reduction from the profit).

      • Thank you Mr. Moffat, I was assuming the same but wanted to clear my doubt.

        Further, the lectures on Statement of Cash Flows was delivered very well. Both of the methods were properly explained.

    • The tax charge is the tax expense for the year. It will usually be paid in the following year.

      You really should watch the free lectures on this (there is no point in attempting the tests if you have not watched the lectures).

  15. hi…

    i would like to know why in question 3,,tax would not appear as cash out flow,,while in statement of cash flow format,, tax appear as an element of cash out flow in operation,,,then why not please.

    • It is the tax actually paid that appears on the Statement of Cash Flows, and that will normally not be the same as the tax charge for the year (which will usually be paid in the following year).

      I do suggest that you watch the lectures because this is explained in the free lectures!

  16. Sir,i would like to ask about Question 3.
    The first statement “The purchase of Long term investments” would appear on a CF?
    Why?What if we have bought it on credit.So it would appear only just like adjustment, wouldn’t it?
    Thank you in advance.

  18. John

    In regards to question 4 statement (4). Is the reason the statement is not correct because the profit would appear in the Cashflows from Operating Activities and not from investing activities? I just want to confirm that it actually does appear.

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