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Tutorial - Week9 Copy Ans

This document provides materials for a tutorial on analyzing cash flows from financial statements. It discusses the two methods for reporting cash flows from operations - the direct method and the indirect method. It also includes practice exercises, with the first asking students to calculate cash flows related to sales, accounts payable, non-operating receipts, and asset purchases using the financial statements provided for a company. The second exercise asks students to identify transactions and events as sources of cash, uses of cash, or adjustments, and classify them in the statement of cash flows.

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146 views6 pages

Tutorial - Week9 Copy Ans

This document provides materials for a tutorial on analyzing cash flows from financial statements. It discusses the two methods for reporting cash flows from operations - the direct method and the indirect method. It also includes practice exercises, with the first asking students to calculate cash flows related to sales, accounts payable, non-operating receipts, and asset purchases using the financial statements provided for a company. The second exercise asks students to identify transactions and events as sources of cash, uses of cash, or adjustments, and classify them in the statement of cash flows.

Uploaded by

Anis Ashsiffa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Tutorial Week 9 – Topic 6

Topic 6
Textbook Chapter 7

Questions – 7.5

Q7.5. Describe the two methods of reporting cash flow from operations.

Exercise: 7.4 and 7.5

E7.4

The balance sheets of Barrier Corporation as of December 31, Year 2, and Year 1,
and its statement of income and retained earnings for the year ended December 31,
Year 2, follow:

BARRIER CORPORATION
Balance Sheets
December 31, Year 2 and Year 1

SR 1
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

BARRIER CORPORATION
Statement of Income and Retained Earnings
For Year Ended December 31, Year 2

Additional information:

SR 2
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

 Capital stock is issued to provide additional cash.


 All accounts receivable and payable relate to operations.
 Accounts payable relate only to items included in cost of sales.
 There are no noncash transactions.

Required:
Determine the following amounts:

a. Cash collected from sales during Year 2.


b. Cash payments on accounts payable during Year 2.
c. Cash receipts during Year 2 not provided by operations.
d. Cash payments for noncurrent assets purchased during Year2.

SR 3
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

E7.5

Indicate if each transaction and event is (1) a source of cash, (2) a use of cash, and/or
(3) an adjustment leading to a source or use of cash (assume an indirect format). List
also its placement in the statement of cash flows: operations (O), financing (F),
investing (I), noncash significant (NCS), noncash nonsignificant (NCN), or no effect
(NE).

Example

Transaction/Event Source Use Adjustment Category in Statement of CF


Cash dividend received X O

a. Increase in accounts receivable


b. Pay bank note
c. Issue common stock
d. Sell marketable securities
e. Retire bonds
f. Declare stock dividend
g. Purchase equipment
h. Convert bonds to preferred stock
i. Pay dividend
j. Increase in accounts payable

SR 4
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

SR 5
BBF3034 – Analysis and Valuation of Financial Statements Semester 1 23/24

Questions are from Subramanyam, K. R., Financial Statement Analysis, 11th Edition,
McGraw Hill

SR 6

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