FAC1503 ASS 2 ASSESSMENT QUESTIONS
WITH ACCURATE ANSWERS FULL
SOLUTION SET
●● Timing of SCF
Answer: It is a change statement that summarizes transactions over a
period of time
●● What does SCF show to investors
Answer: Efficiency with cash, liquidity, and solvency
●● What is "cash"
Answer: Cash, cash equivalents, and restricted cash
●● Cash equivalents are..
Answer: short term, highly liquid investments that can be readily
converted into cash with little risk of loss (maturity less than three
months from date of purchase)
●● Restricted cash is...
Answer: Amount set aside for designated purposes like debt repayment
,●● Is purchasing cash equivalents shown on the balance sheet
Answer: No, it is already classified as the same thing
●● Elements of SCF
Answer: Operating activities, investing activities, financing activities,
reconciliation of net inc/dec in cash, any significant non-cash investing
and financing activities
●● Operating activities show inflows and outflows from activities that
Answer: affect the income statement
●● Inflows of operating activities are recieved from
Answer: Customers from sale of goods/services, interest, and dividends
from investors
●● Outflows from operating activities are paying for
Answer: Purchase of inventory, salaries and operating expenses, interest
on debt, and income taxes
●● I/S items non-cash
Answer: Depreciation, amortization, gains/losses on sale of an asset
●● Ways to report operating activities
, Answer: Direct method and indirect method
●● Direct method
Answer: report cash effect of each operating activity "directly"
●● Indirect method
Answer: Start with NI and make adjustments
●● Investing activities
Answer: Report inflows and outflows caused by acquisition and
disposition of assets
●● Investing inflows include cash recieved from
Answer: Sale of PPE, sale of investment securities, collection of
nontradable recievables
●● Investing outflows include cash paid for
Answer: Purchase of PPE, purchase of investing securities like stocks or
bonds in other companies (except cash equivalents and trading
securities), and loans to other entities
●● Financing activites
WITH ACCURATE ANSWERS FULL
SOLUTION SET
●● Timing of SCF
Answer: It is a change statement that summarizes transactions over a
period of time
●● What does SCF show to investors
Answer: Efficiency with cash, liquidity, and solvency
●● What is "cash"
Answer: Cash, cash equivalents, and restricted cash
●● Cash equivalents are..
Answer: short term, highly liquid investments that can be readily
converted into cash with little risk of loss (maturity less than three
months from date of purchase)
●● Restricted cash is...
Answer: Amount set aside for designated purposes like debt repayment
,●● Is purchasing cash equivalents shown on the balance sheet
Answer: No, it is already classified as the same thing
●● Elements of SCF
Answer: Operating activities, investing activities, financing activities,
reconciliation of net inc/dec in cash, any significant non-cash investing
and financing activities
●● Operating activities show inflows and outflows from activities that
Answer: affect the income statement
●● Inflows of operating activities are recieved from
Answer: Customers from sale of goods/services, interest, and dividends
from investors
●● Outflows from operating activities are paying for
Answer: Purchase of inventory, salaries and operating expenses, interest
on debt, and income taxes
●● I/S items non-cash
Answer: Depreciation, amortization, gains/losses on sale of an asset
●● Ways to report operating activities
, Answer: Direct method and indirect method
●● Direct method
Answer: report cash effect of each operating activity "directly"
●● Indirect method
Answer: Start with NI and make adjustments
●● Investing activities
Answer: Report inflows and outflows caused by acquisition and
disposition of assets
●● Investing inflows include cash recieved from
Answer: Sale of PPE, sale of investment securities, collection of
nontradable recievables
●● Investing outflows include cash paid for
Answer: Purchase of PPE, purchase of investing securities like stocks or
bonds in other companies (except cash equivalents and trading
securities), and loans to other entities
●● Financing activites
