Net income = Revenues - Expenses

NI in accrual basis = Rev incurred in 2020 - Expenses incurred in 2020 =

NI in cash basis = Cash receipts in 2020 - Cash payments in 2020 =

Accrual basis pros and cons

ACCRUAL BASIS (CƠ SỞ DỒN TÍCH): to prepare SCI, SCE, SFP and guided by IAS 1
Revenues = Revenues incurred (doanh thu thực sự phát sinh)
Expenses = Expenses incurred (cp thực sự phát sinh)
(Record Revenues/Expenses without considering the Cash payments and cash receipts)
CASH BASIS (CƠ SỞ TIỀN): to prepare SCF guided by IAS 07
Revenues = Cash receipts (DT bằng tiền thu về trong kỳ)
Expenses = Cash payments (cp bằng tiền chi ra trong kỳ)
(Record Revenues/Expenses at the date of the Cash payments and cash receipts)
 Changes in Cash = 17000-12000= 5,000 = OCF + ICF + FCF
CASE 1 - HANDOUT:OCF + ICF + FCF = 17,000 - 12,000 = 5,000

20,000
14,000
2,000

- 5,000
- 1,000
10,000

Homework: Finding the OCF for Ca

 1/ OCF
2/ ICF (nca), FCF (BOND PAYABLE)
3/ OCF (LOSS, DEPRE), ICF (NCA)
4/ FCF (EQUITY)
5/ FCF (BOND), OCF (GAIN ON IS)
6/ FCF (DIVIDENDS)

FORMULA TO COMPUTE OCF:

Step 1: read SFP, calculate changes in CA and CL
Step 2: read Additional information and apply formula:
Net income 38,000 accrual
(1) Adjust for non-cash items (revenues/expenses):
Depreciation ex plus 24,000 24,000 trong cơ sở dồn tích đã trừ đi nên cơ sở tiền phải cộng lạ
Allowances for bad debts ex none -
(2) Adjust for non-operating items (belong ICF, FCF):
Gain/Loss from retiring of bonds - 16,000 because I already plused 16000 to find the NI under Accr
Gain/Loss from disposal of NCA 6,000
(3) Adjust for changes in CA and CL: Cash and other CA have the reversed movements, Cash and CL have t
Changes in AR - 20,000 Cash + other assets = L + Equity
Changes in MI - 14,000
Changes in prepayments - 2,000
Changes in AP - 5,000
Changes in interest payable - 1,000
Changes in income tax payable 10,000
OCF (Net income under cash basis) 20,000

mework: Finding the OCF for Case 2 in handout, several more I will give in this file.
n cơ sở tiền phải cộng lại => để tính được 38000 đã trừ đi 24 cpkh nên cp này trong cơ sở tiền mặt k có đi ra

to find the NI under Accrual basis, now, I will minused it out when computing the NI under cash basis (OCF)

nts, Cash and CL have the same movements

mặt k có đi ra

asis (OCF)
ICF: pp trực tiếp của icf và fcf khác với pp trực tiếp của ocf bởi vì tính đa dạng của icf và fcf nên k thể khuô
1/STEP 1: CHECKING BALANCES OF ACCOUNTS AFFECTED: Reading notes to fill in T accounts
PPE AD - PPE
210,000 48,000 Dr Depre ex
70,000 30,000 12,000 CR AD - PPE
(note 2) (note 3) (note 3) 24,000
(IS) 1. vẽ t acc điền phát sinh dư, p
sau bước 1 định khoản các ng
250,000 60,000
(fully explained) (fully explained)
It means: no more implying transactions to care for!
2/ STEP 2: JOURNALISE THE ENTRIES:
Purchase PPEDr PPE 70,000
Cr Cash 10,000 (cash payments - ICF)
Cr Bond payables 60,000 (disclose below the CFS)
Dispose PPE:Dr Cash 12,000 (cash receipts - ICF)
Dr AD - PPE 12,000
Dr Loss on sale - PPE 6,000 (IS, additional info)
Cr PPE 30,000
3/ Present ICF:
Cash payments for purchasing PPE - 10,000 luôn mang dấu âm
Cash reeeipts for disposing PPE 12,000
Net ICF 2,000

FCF:
1/STEP 1: CHECKING BALANCES OF ACCOUNTS AFFECTED:
Bond payables Share capital
64,000 80,000

34,000 (note 2) 15,000

(note 5) 60,000 (note 4)

90,000 95,000
(fully explained) (fully explained)
2/ STEP 2: JOURNALISE THE ENTRIES:
1/ Dr Bond payables 34,000 do dn đã trả 3/ a/Dr RE/Cr Dividends payables
CR Gain on retirment of bonds 16,000 (IS) b/Dr Dividends payables
Cr Cash 18,000 Cr Cash
2/ Dr Cash 15,000
Cr SC 15,000

3/ Present FCF:
Cash payments for retiring bonds - 18,000
Cash receipts from share issues 15,000
Cash payments for dividends - 14,000
Net FCF - 17,000
OCF + ICF + FCF = 5,000

FULL CFS PRESENTATION: FULL CFS PRESENTATION:

Present OCF directly: Present OCF indirectly:
Cash receipts from sales/AR: 570,000 Net income
Cash payment for purchasing Invento - 319,000 (1) Adjust for non-cash items (revenues/expe
Cash payment for operating ex - 218,000 Depreciation ex
Cash payment for interest - 8,000 Allowances for bad debts ex
Cash payment for tax - 5,000 (2) Adjust for non-operating items (belong IC
Net OCF 20,000 Gain/Loss from retiring of bonds
3/ Present ICF: Gain/Loss from disposal of NCA
Cash payments for purchasing PPE - 10,000 (3) Adjust for changes in CA and CL: Cash an
Cash reeeipts for disposing PPE 12,000 Changes in AR
Net ICF 2,000 Changes in MI
3/ Present FCF: Changes in prepayments
Cash payments for retiring bonds - 18,000 Changes in AP
Cash receipts from share issues 15,000 Changes in interest payable
Cash payments for dividends - 14,000 Changes in income tax payable
Net FCF - 17,000 OCF (Net income under cash basis)
OCF + ICF + FCF = 5,000 3/ Present ICF:
Cash payments for purchasing PPE
Cash reeeipts for disposing PPE
Net ICF
3/ Present FCF:
Cash payments for retiring bonds
Cash receipts from share issues
Cash payments for dividends
Net FCF
OCF + ICF + FCF =
ng của icf và fcf nên k thể khuôn mẫu hóa
fill in T accounts

Dr Depre ex 24,000 (IS)

CR AD - PPE 24,000

1. vẽ t acc điền phát sinh dư, psinh giảm xem có nvu ẩn ch có thuyết minh ch công bố hay k
sau bước 1 định khoản các nghiệp vụ phát sinh tăng hay giảm, tập trung vào các tk có bút toán tiền, ở purchase ppe và dispos

Dr Depre ex 24,000
CR AD - PPE 24,000

Retained earnings
88,000

14,000 NI = 38,000

112,000
(fully explained)

dends payables 14000

14000
14000
ENTATION:

38,000
n-cash items (revenues/expenses):
24,000
-
n-operating items (belong ICF, FCF):
tiring of bonds - 16,000
sposal of NCA 6,000
anges in CA and CL: Cash and other CA have the reversed movements, Cash and CL have the same movements
- 20,000
- 14,000
- 2,000
- 5,000
- 1,000
e tax payable 10,000
under cash basis) 20,000

r purchasing PPE - 10,000

disposing PPE 12,000
2,000

r retiring bonds - 18,000

m share issues 15,000
r dividends - 14,000
- 17,000
5,000 cash basic
ền, ở purchase ppe và dispose
he same movements
DIRECT METHOD - OCF:

không tự đổi các thứ tự tài khoản và không ghi 2 hàng khác nhau tỏng 1 chu trình
không đổi dòng
3. điền số dư vào tài khoản trung tâm, số dư từ bs
nhìn trên báo ctn ghi phát sinh tăng của tk sale. Chuyển sale vào trong acc reic (giả định mọi dthu trong kỳ đều thự
1/ Sales - AR - Cash Aim? To find Cash receipts from sales/AR: 570,000
SALES AR
40,000

590,000 590,000 X1
SCI/Income statement
60,000
X1 = opening AR + A - Ending AR = A - (ending -ope

2/ Cash - AP - Merchadise Inventory - COGS To find cash payment for purchasing I

Cash AP/TP
40,000

X2? X2 B
319,000 319,000 314,000
35,000
X2 = Opening bl AP + B - Ending bl AP

3/ Cash - Prepaid Ex/ Other payables - Operating ex: To find cash payment for operating ex

Cash Prepaid ex
4,000

X3 X3 A
218,000 218,000 216,000
6,000
X3 (prepaid ex) =Ending bl Prepaid ex + Operating ex - Opening
X3 (other payables) = Opening Payables + Operating ex - Endin

4/ Cash - Interest payables - Interest expenses: 8,000

X4 = Opening Interest Payable
 Cash Interest payables
4,000
7,000
X4 X4
8,000 8,000
3,000

5/ Cash - Tax payables - Tax expenses: X5 = Opening Tax payables + Tax ex - Ending tax p

Cash Tax payables

12,000

X5 X5 15,000
5,000 5,000
22,000

Present: DIRECT METHOD TO FIND OCF:

Cash receipts from sales/AR:
Cash payment for purchasing Inventory through AP and COGS
Cash payment for operating ex
Cash payment for interest
Cash payment for tax
Net OCF
mọi dthu trong kỳ đều thực hiện từ việc bán chịu) sau đó thu tiền từ ar, đặt x1 là số tiền thu được từ ả, x1=570

CASH delta ar = 60k-40=20k=

Cash receipts form sales

X1
570,000

ding AR = A - (ending -opening)AR = A - changes of AR

Dr Inv/Cr AP Dr AR/Sales Dr COGS/Cr MI
ent for purchasing Inventory through AP and COGS 319,000

MI/Purchases COGS 1. điền số dư ở nhóm t

70,000 a) dr inv/cr ap 314k
b) dr cogs/cr inv 300k
B 300,000 300,000
mua chịu 314,000
84,000

B= Ending b/l MI + C - Opening b.l MI

perating ex 218,000

Operating ex

216,000

+ Operating ex - Opening bl Prepaid ex

es + Operating ex - Ending bl payables

Opening Interest Payables + Interest ex - Ending bl Interest Payables

 Interest expenses/finance costs

7,000

s + Tax ex - Ending tax payables 5,000

Tax expenses

15,000

pp gian tip ra dong tien ocf nhanh hơn

570,000
- 319,000
- 218,000
- 8,000
- 5,000
20,000
delta ar = 60k-40=20k=590k (sale theo accrual basis)-570k (cash basis)

1. điền số dư ở nhóm tk trung tam, điền tk cp trên bctn: 300k

a) dr inv/cr ap 314k
b) dr cogs/cr inv 300k
ng tien ocf nhanh hơn