Acca financial Accounting (FA) Study Text ac ca (FA)

Statement of cash flows 

356

 

KAPLAN PUBLISHING

 

Test your understanding 2 

Statement of financial position of Geronimo at 31 December 

20X6 20X5 

 $000 

$000 

Non-current assets 

1,048 

750 

Accumulated depreciation 

(190)

(120)

–––––

–––––

858

630

Current assets 

Inventory

98

105

Trade receivables 

102 

86 

Dividend receivable 

57 

50 

Cash

42

18

–––––

–––––

299

259

–––––

–––––

Total assets 

1,157 

889 

–––––

–––––

Equity and liabilities: 

Share capital 

200 

120 

Share premium 

106 

80 

Revaluation surplus 

212 

12 

Retained earnings 

283 

226 

–––––

–––––

801

438

Non-current liabilities: 

Loan

200

300

Current liabilities: 

Trade payables 

77 

79 

Interest accrual 

3 

5 

Tax payable 

76 

67 

–––––

–––––

156

151

–––––

–––––

Total equity and liabilities 

1,157 

889 

–––––

–––––

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Chapter 19 

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357 

Statement of profit or loss for of Geronimo for the year ended 

31 December 20X6 

$000

Sales revenue 

1,100 

Cost of sales 

(678) 

–––––

Gross profit 

422 

Operating expenses 

(309) 

–––––

Operating profit 

113 

Investment income 

– interest

15 

– dividends

57 

Finance charge

(22) 

Income tax

(71) 

–––––

Net profit for year 

92 

–––––

•

Operating expenses include a loss on disposal of non-current

assets of $5,000.

•

During the year and item of plant was disposed of. The plant

originally cost $80,000 and had accumulated depreciation to the

date of disposal of $15,000.

Calculate the cash flow generated from operations using the 

indirect method. 

5 

Cash flows from operating activities 

Cash flows may include: 

•

interest 

paid

•

income taxes paid.

Calculation of interest/income taxes paid 

The cash flow should be calculated by reference to: 

•

the charge to profits for the item (shown in the statement of profit or loss);

and

•

any opening or closing payable balance shown on the statement of

financial position.

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Statement of cash flows 

358

 

KAPLAN PUBLISHING

 

A T-account working may be useful: 

e.g. Interest/tax payable account

 $ 

$ 

 

Accrual b/f

X

Cash paid (ß) 

X 

P&L charge 

X 

Accrual c/f 

X 

 ––––– 

 ––––– 

 X 

 X 

 ––––– 

 ––––– 

The opening and closing accruals are taken from the relevant statement of 

financial position. The expense for the year is taken from the statement of profit 

or loss. The missing figure will therefore be the cash paid in the year.  

Test your understanding 3 

Identify and calculate the cash flows relating to interest paid and 

income tax paid for inclusion under the heading ‘Cash flows from 

operating activities’ within Geronimo’s statement of cash flows. 

6 

Cash flows from Investing activities 

Cash flows from Investing activities may include: 

•

interest 

received

•

dividends 

received

•

proceeds of sale of non-current assets.

Cash outflows may include:

•

purchase of property, plant and equipment.

Calculation of interest and dividends received 

Again, the calculation should take account of both the income shown in the 

statement of profit or loss and any relevant receivables balance from the 

opening and closing statements of financial position. 

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Chapter 19 

KAPLAN PUBLISHING

359 

A T-account working may be useful: 

e.g. Interest receivable

 $ 

$ 

Interest receivable b/f 

X 

P/L interest receivable 

X 

Cash received (ß) 

X 

Interest receivable c/f 

X 

–––––

–––––

X

X

–––––

–––––

Test your understanding 4 

Identify and calculate the dividends and interest received to be 

shown under the heading ‘Cash flows from investing activities 

‘within Geronimo’s statement of cash flows. 

Calculation of purchase of property, plant and equipment and proceeds of