Self-study SCF Questions and Answers

School: National University of Singapore - Course: ST 1131 - Subject: Accounting

Question: Kazaam Company Thecompany's statements of financial position and income statementare shown below.Prepare the operating activities section of its statement of cash flows using the direct method.

Page2of5 John J. Wild, Winston Kwok, Ken W. Shaw, and Barbara Chiappetta, Financial Accounting: Information for Decisions, Revised 3rd Edition, McGraw-Hill Education (Asia), 2020Answer: Kazaam Company SCF Direct Method KAZAAM COMPANY Statement of Cash Flows For Year Ended December 31, 2021 Cash flows from operating activities Cash received from customers (Note 1).................................$480,875 Cash paid for merchandise (Note 2)......................................(299,750) Cash paid for other expenses (Note 3)...................................(135,625) Cash paid for income tax........................................................(12,125) Net cash from operating activities.........................................$ 33,375 Supporting calculations (1) Sales - Increase in receivables = $496,250 - ($65,000 - $49,625) = $480,875 (2)Cost ofIncrease inDecrease in goods soldinventorypayables= $250,000+($273,750 - $252,500)+($116,625 - $88,125)= $299,750 (3) Other expenses - Decrease in prepaid expenses = $136,500- ($6,250 - $5,375) = $135,625 + +

Page3of5 John J. Wild, Winston Kwok, Ken W. Shaw, and Barbara Chiappetta, Financial Accounting: Information for Decisions, Revised 3rd Edition, McGraw-Hill Education (Asia), 2020Question: Classification SCF Indirect Assume that this company reports under IFRS and uses the indirect method to report cash provided by operating activities, indicate where each item would appear on its statement of cash flows by placing an X in the appropriate column. Answer: Classification SCF Indirect Item d: The loss is an adjustment in operating activities, and the cash received is in investing activities. Item g: Under IFRS, dividends can be operating or financing. Statement of Cash FlowsNoncash OperatingActivitiesInvestingActivitiesFinancingActivitiesInvesting &FinancingActivitiesNot Reported on Statement or in Notes a. Accounts receivable decreased in the year X b. Purchased land by issuing ordinary shares X c. Paid cash to purchase inventory X d. Sold equipment for cash, yielding a loss XX e. Accounts payable decreased in the year X f. Income tax payable increased in the year X g. Declared and paid a cash dividend XX h. Recorded depreciation expense X i.Paid cash to settle long- term note payable X j. Prepaid expenses increased in the year