Summary of MFRS 107

Cash flow statement cash basis [other statements are accrual basis]

- Direct method

 More details

 Competitors can view it as well (public listed company)

- Indirect method ***[most common in exam]

 Most common being used

Profit before tax [always starts from PBT!]

(+-) Non-cash item (from operating expenses in income statement)

Eg for non-cash item: depreciation, amortization, investment income, warranty

 Income statement

Revenue

(-) COGS

= Gross Profit

(-) Operating expenses [non-cash items: gain for non-operating items (-) in CF; loss(+) in CF]

= Profit before tax (where cash flow statement starts)

(-) Tax

= Retained profit

(-) Working capital change [the difference between current year and previous year amount]

*CA increases, (-); decreases, (+)

CL increases, (+); decreases, (-)

Net cash flow from operating activities (OA)

(+-) Investing Activities [long term asset: increases, (+); decreases, (-)]

(+-) Financial Activities [equity and short and long-term liabilities: increases, (+); decreases, (-)]

Net increase/ decrease in cash & cash equivalent

Cash & cash equivalent b/f

Cash & cash equivalent c/f

Analysis Part

Eg: Would you invest in this company?

*Look at their OA, don’t look at their Net increase/ decrease in cash & cash equivalent

Cash flow performance profit mainly from operating activities, well performance!

Note: If the company has net increase in cash & cash equivalent but have negative net cash flow
from OA, the company is not performing well. Their main income does not come from their business
operation!

Additional footnote

1. Interests or dividends can be reported in either: _

- OA [expensesincome statement (interest paid)]

- FA, or [issuing loan: interest received/ dividend paid shareholder (Equity=FA)]

- IA.

2. Disposal compare CA VS Proceed (amt sold)

a. Loss  OA (+)

Gain OA (-)

b. Proceed amt (+) in IA

c. PPE T account (-)

d. Depreciation OA (+)

3. Depreciation

a. Record in PPE T-account

b. Add back into non-cash transactions

4. Penalty Expenses= non-cash income

- (-) loan expenses [financing] *including penalty amount!

- Eg: You signed an agreement to borrow a 15-year-loan. After five years, you decided to
settle all payment in once. You are required to pay penalty from bank! It is because bank had
a loss of ten years interest from you.

5. Revaluation reserve is excluded in CF statement.

6. Check all the assets and liabilities in the question given [working capital changes]

- To check the new issuance shares!