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Practical caseIAS 7L1 · Fundamental

Fifteen transactions to classify: operating, investing, financing or outside the statement

4 documents6 tasks≈ 45 min
0 / 9 items completed
Standards
IAS 7 — Statement of Cash Flows
Assistance levelFull guidance · strong assistance
  • Method: shown
  • Checklist: shown
  • Hints: shown
  • Step-by-step work: shown

Case brief

Situation

Lunadis Équipements SAS (fictitious entity) distributes and services handling trucks. Its accountant is preparing the first statement of cash flows for 20X5 from the list of cash transactions. You help classify each transaction.

Your assignment

Classify each of the fifteen transactions as operating, investing or financing activities, or outside the statement; split the two mixed payments; compute the three net cash flows and the change in cash; present the entries for the two designated transactions and their effect; conclude.

Work on this file as you would in practice: read the situation, open the documents, sort the useful information, then carry out the work requested. The solution is revealed once you submit.

Fundamental level: the method, help and references are shown.

Method

  1. Read the brief and the assignment.
  2. Open each document and spot the relevant data.
  3. Carry out the work in the suggested order.
  4. Submit, then read the conclusion and the model answer.

File checklist

  • Open each piece (0 / 4 consulted) · to do
  • Sort the information in the pieces · to do
  • Carry out the work (0 / 9) · to do
  • Submit the file, then assess yourself · to do

Documents

File documents

4 documents: open each one to read it.

Document 1Table

List of cash transactions 20X5

List of cash transactions 20X5 (EUR): (1) receipts from sales 2,400,000; (2) payments to suppliers 1,520,000; (3) salaries paid 430,000; (4) purchase of a warehouse paid in cash 600,000; (5) sale of a used truck from the internal fleet 18,000; (6) purchase of a long-term minority stake in a supplier, not for dealing 120,000; (7) drawdown of a bank loan 400,000; (8) loan instalment paid 130,000; (9) issue of shares for cash 250,000; (10) dividends paid 80,000; (11) income tax instalments 70,000; (12) rent under a vehicle lease 30,000; (13) placement of surplus cash in a money market fund 150,000.

Data

Key data from the documents

The figures of the documents, gathered for your work.

ItemValueFound in
Receipts from sales€2,400,000.00
Payments to suppliers€1,520,000.00
Salaries paid€430,000.00
Purchase of a warehouse€600,000.00
Sale of a used truck€18,000.00
Purchase of a minority stake€120,000.00
Loan drawdown€400,000.00
Loan instalment paid€130,000.00
Issue of shares for cash€250,000.00
Dividends paid€80,000.00
Income tax instalments€70,000.00
Rent under the lease€30,000.00
Placement in a money market fund€150,000.00
Interest included in the instalment€30,000.00
Interest included in the rent€6,000.00
Right-of-use asset of the new vehicle€90,000.00
Bonds converted into shares€200,000.00
Gain on the sale of the truck€5,000.00
Cash and cash equivalents at the beginning€312,000.00
Cash and cash equivalents at the end€400,000.00
Depreciation charge for the year€85,000.00

Sorting the information

Not every document matters: identify those that affect the accounting treatment.

Part 1 · Classification · Analysis

Sort each document: does it affect the accounting treatment?

Drag each item into its category, or tap the category under the item.

To sort4

  • List of cash transactions 20X5

  • Contract extracts

  • Accountant's note

  • Depreciation schedule

Relevant to the treatment0

    No effect0

      Questions

      Work programme

      6 tasks in the order of the file. Calculations, entries and effects on the financial statements are marked; written answers are self-assessed against the solution.

      1. Task 1Analysis

        Classify the fifteen transactions and identify those that do not appear in the statement.

        Set out the facts, the question raised, then your analysis.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      2. Task 2Calculation

        Split the loan instalment and the rent between interest and principal.

        Start from the data in the pieces, set the formula, check the unit and the order of magnitude.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Split the loan instalment and the rent between interest and principal.

        1. €
        2. €

        Checks

        • 0 / 2 steps entered
        • Amounts readable

        Result: Principal portion of the rent

      3. Task 3Calculation

        Compute the three net cash flows and the net change in cash, then reconcile it with the balances.

        Start from the data in the pieces, set the formula, check the unit and the order of magnitude.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Calculation

        Compute the three net cash flows and the net change in cash, then reconcile it with the balances.

        1. €
        2. €
        3. €
        4. €

        Checks

        • 0 / 4 steps entered
        • Amounts readable

        Result: Net change in cash

      4. Task 4Journal entries

        Present the entry for the loan instalment and the entry for the vehicle lease.

        Identify the accounts affected and the direction of each movement; check the balance.

        Calculator

        Click in an answer field to be able to insert the result.

        Part 1 · Journal entry · Journal entries

        Entry 1 of 2

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        3. Line 3

        TotalsDebit0Credit0

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Journal entry · Journal entries

        Entry 2 of 2

        One line = one account and one side. Add a line if the entry needs more; the balance check updates live.

        1. Line 1

        2. Line 2

        TotalsDebit0Credit0

      5. Task 5Effects on the financial statements

        What is the effect of these two entries on the financial statements?

        For each financial statement, state the line affected, the direction and the amount.

        Part 1 · Classification · Analysis

        State the direction of the effect on each financial statement aggregate.

        1. Financial position (balance sheet)

        2. Profit or loss

        3. Other comprehensive income

        4. Equity

        Calculator

        Click in an answer field to be able to insert the result.

        Part 2 · Calculation · Analysis

        Quantify the effect on the aggregates concerned.

        1. €
        2. €
        3. €

        Checks

        • 0 / 3 steps entered
        • Amounts readable

        Result: Amount of the effect — Equity

      6. Task 6Conclusion

        Write the conclusion.

        Write a conclusion that cites the facts and the treatment chosen.

        This answer is not marked automatically: after submitting, you will compare it with the solution.

      Workspace

      Your working draft for this file: points noted, leads, intermediate calculations.

      Saved on this device only; never graded.

      Conclusion

      Submission and solution

      Complete every item of the file to submit it (0 / 9).

      Document this file

      These working papers use the data and results of this case.

      Normative references

      • IAS 7 §6
      • IAS 7 §10
      • IAS 7 §12
      • IAS 7 §14
      • IAS 7 §16
      • IAS 7 §17
      • IAS 7 §43
      • IAS 7 §44