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Statement of Cash Flows - Coggle Diagram

- - - - shows operating cash receipts and payments e.g. cash payment to supplier
      - users can see actual sources and uses of cash
      - most entities wont produce this level of detail and therefore can prove to be expensive
      - as this information is not already included in the FSs many entities are also cautious due to the time involved to produce
      - changes in receivables
        sales revenue, plus opening AR balance less closing AR balance
      - changes in payables
        cost of materials plus closing inventory less opening inventory plus opening AP balance less closing AP balance
      - Exam technique for direct costs is to work out movements in each aspect separately e.g. NC assets, suppliers, receivables, inventory/purchases
        
        When using workings, take the opening and closing balances, add in any adjustments e.g. Cost of Sales adjustments, before adding the balancing figure which will be the SoCF figure
        
        Each figure may then be added to the next workings as the adjustment figure e.g. purchases figure from CoS is then added as adjustment figure to Payables, with the balancing figure then the SoCF payments to suppliers figure
        
        Remember prepayments/accruals have different cash movements to postings
      - Tax paid must be adjusted by adding together SPL tax expense charge, opening tax liability balance and closing tax liability balance
    - - based upon making adjustments to the profit before tax to arrive at cash flows from operations
      - depreciation
        adjustment is made to remove this from SoCF since the posting reflects the wearing out of an asset, however cash implication is only when buying/selling the asset
      - profit/loss on disposal of assets
        profit is not cash, therefore this should be adjusted to reflect this
      - changes in inventory
        profit is calculated after charging cost of sales, which includes both opening and closing inventory, adjustment is required to show only figure spent on materials in the year not cost of goods used in the year
      - changes in receivables
        SPL figure is based on sales revenue, however SoCF needs adjustment to reflect only the cash actually received in payment (difference between opening and closing AR balance)
      - changes in payables
        SPL figure is linked to overall expenditure of APs, however adjustment needs to show actual payments to suppliers in the year (difference between opening and closing balances)
      - Profit before tax plus finance costs plus depreciation less/plus gain/loss on disposal plus/less decrease/increase in receivables plus/less increase/decrease in payables less increase in inventory
      - Changes in non current assets
        Opening balance plus/less revaluation SPL less disposals less depreciation less closing balance
- - - - Interest received is also added into this section as it is likely arising from a specific investment activity