cash flow statement - Mindset Learn

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Accounting Grade 12 www.learnxtra.co.za

SESSION 6: CASH FLOW STATEMENT KEY CONCEPTS: In this session we will look at: - Companies Financial Statements - Cash Flow Statements X-PLANATION Companies Financial Statements:

INCOME STATEMENT

BALANCE SHEET

CASH FLOW STATEMENT

Cash Flow Statement: The cash flow statement reflects the movement of cash within an enterprise during a specific period. The Companies Act stipulates that a cash flow statement must be part of the company’s financial statements The purpose of doing the cash flow statement is to:  Determine the cash inflows for the financial period and their sources  Determine the cash outflows for the financial period and what it was spent on  Determine the net effect of the changes in cash  Prepare it as part of the published financial statements of a public company  Help assess the liquidity of the company  How were capital developments projects financed?  Does the company generate sufficient cash from its operations to maintain its current operating capacity Some users of the Cash Flow Statement:  Management  Directors  Banks  Investors

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Accounting Grade 12 www.learnxtra.co.za Format of the Cash Flow Statement (Components):

Cash Flow Statement

Cash flows from operating activities

Cash flows from investing activities

The most common source of cash for a company. It involves the buying and selling of inventory, receipts from debtors, payments to creditors and the paying of expenses

Cash changes as a result of buying and selling of tangible / fixed assets and any changes in investments i.e. Fixed deposits

Inflows  Money received from sales  Money received from other incomes Outflows  Money paid for stock  Money paid for expenses  Money paid for tax  Money paid for dividends

Inflows  Money received from the sale of assets  Fixed deposits maturing Outflows  Money paid for replacing tangible / fixed assets  Money paid for buying new assets  Investing in fixed deposits

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Cash flows from financing activities

Cash changes as a result of obtaining financing and paying off loans/issuing of shares

Inflows  Money received from issuing shares  Money received from obtaining loans Outflows  Money used for repaying loans

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Accounting Grade 12 www.learnxtra.co.za X-AMPLE QUESTIONS: Question 1: Use the Income Statement and the Balance Sheets provided to complete the Cash Flow. Statement of Orpen Ltd for 29th February 2012 INFORMATION: Orpen Ltd Income Statement for the year ended 29th February 2012

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Accounting Grade 12 www.learnxtra.co.za Balance Sheet of Orpen Ltd as at 29th February 2012

ADDITIONAL INFORMATION:  Included in trade and other payables is R4 300 in respect of SARS: Income tax outstanding at the beginning of the year and R2 130 outstanding at the end of the year.  The dividend on ordinary share account reflected a total of R10 000. Thereafter the directors declared a final dividend at the year end.

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Accounting Grade 12 www.learnxtra.co.za 

Land and buildings were purchased during the year. No other fixed assets were purchased or sold.

Answer Booklet:

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Accounting Grade 12 www.learnxtra.co.za SOLUTIONS TO X-AMPLE QUESTIONS Question 1:

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cash flow statement - Mindset Learn

Accounting Grade 12 www.learnxtra.co.za SESSION 6: CASH FLOW STATEMENT KEY CONCEPTS: In this session we will look at: - Companies Financial Statement...

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