Cash Flows Statement-Types of activities



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Cash flows statement is a financial statement that shows how changes in balance sheet accounts and income have an effect on cash and cash equivalents(Bertoneche and Knight, 2017, P43-47). There are three types of cash flow activities; operating, investing and financing.


Items included

Discuss the list of item in the cash flow statement and changes over the past years.

Interest received this is the amount of interest received but not received in cash. There is a decrease in interest from$637,000 to $389,000.Line fees on undrawn facilities contributed to the decrease of interest received.

Distribution received-allocation of capital profits and income that funds generate for investors in a business period. There is an increase in distribution and this decreases the amount of tax on the income.

Income tax paid-tax imposed on entities on their income or profits. It decreases in tax over the period shows that the company’s profit income has reduced.

Income receipts-refers to employees compensation paid to resident workers working outside the country and the investment income. It increases in amount and this means that the company’s taxation from the government has lowered.

Finance cost paid-costs associated with loans and bonds and are paid to banks auditors and law firms. The amount increases over the period that means the debts in the company increases.

Operating payments-an expense a business incurs through its normal business activities for example payroll, rent, and funds allocated to development(“Amount of venture capital invested in Internet-specific companies in the United States”,2015). The operating payments reduce from $59,463,000 on 31 December 2016 to $58,628,00 and this implies that business activities of the company have lowered.

Payments for investments and funs advanced-amount paid for projects being invested in by the company. The amount increases over the business period and this shows that the company is investing a lot on the business.

Purchase of property, plant, and equipment-buying of materials needed in the company drastically increases, this shows that the company is investing in equipment used for production activities.

Payment for the investments-investors could have a holding account that can be used to pay a regular income, this rises in amount so this might be because of high dividends earned by company and increase in wages.

Disposal of investment properties-this may be a gain or loss over the period of time, this drastically reduces and may have caused by losses incurred by Abacus Property Group.

Proceeds for sale and settlement of investments and funds repaid. This increases and that means the company is dealing with the prepayments (from$68,171,000 to $79,222,000)

Return of capital-main payment back to capital owners that exceed the growth of the business or investment.

Payment of issue costs-cost associated with issuing of bonds, it increases over the given period in Abacus Property Group.

Repayment of borrowings-this paying back money previously borrowed from a lender which may be a bank. The repayment in 2017 is less than 2016 this means that the borrowing activities of the company reduced in the year 2017. The company had fewer loans.

Proceeds from borrowings-cash received from issuing of debt such as debentures.

Distribution paid-hiring promoters to popularise your organization across well-known websites or in a certain area(Brodsky, P 203-215). The promotion activities in the company increase in 2017 and hence a more amount of is spent on the activations and popularising of the group in comparison to 2016.

Comparative analysis and evaluation of the company’s(Abacus Property Group) three broad categories of Cashflows.

Companies will produce and consume cash in different ways. Cash flows are in three categories; operations, investing and financing. Operations and investing shows where the company gets its cash from, investing shows how the company spends its cash. Operating activities shows how much is earned from the sale of the company’s goods. Investors prefer companies that produce positive cash flow from operating activities whereas technology firms show negative cash flow. Cash flows from operating activities offer changes in net future income.

Cash flows for investing activities shows the amount of money spent on capital expenditures like buying new equipment or anything needed for the smooth running of the business(Benedict,2008). Also involves monetary investments.

Cash flows for financing activities use of cash for organization activities. Cash may be raised through selling stock and bonds or by getting loans from the bank((Kenley,2015 ). Paying back a loan would be a use of cash flow, like dividends payments and common stock repurchases would show.


Items reported in the comprehensive income statement and explain your understanding of each.

Rental income-this is the net income of the landlord collected from a tenant or a group of tenants for using a property or a particular space.

Hotel income-revenue received from available room or services offered in the hotel.

Finance income-revenue earned and reported financial statements of a company.

Fee income-revenue taken in by a financial institution from charges related to a customer account.

Sale of inventory  -all work that has occurred in production prior to sale.

Net change in fair value of investments and financial instruments derecognized.

Net gain on sale of a property, plants, and equipment-profit earned when you sell equipment.

Net change in fair value of investment properties and property, plants and equipment held at balance date.

Share of profit from equity accounted investments.-sharing of gains and dividends an organization gets after investing.

Property expense and outgoings-costs incurred by the owner of a property.

Hotel expenses-expenses incurred by workers when they were out on business and stayed in a hotel.

Cost of inventory sales-the price of all the work that has occurred during production activities.

Finance costs-cost and interests involved in the borrowing of money to purchase assets or make any business activities a success.

Administrative and other expenses-cost incurred in the running of an organization.

Why items in the comprehensive income are not included in the Income statement/Profit and Loss statement.

Comprehensive income measures the change in an owner’s interest in business wheres income statement/Profit and loss statement measures if the business makes a loss or profit. Comprehensive income can also be said to recognize items; it includes any income or expenses (apart from transactions made by company owners)that would not be in the Income statement/  Profit and loss statement(Hills,2007).


Firm’s tax expense in the latest financial statements


Is the figure the same as the company tax rate times your firm’s accounting income? Explain the case.

NO. A company does not provide its actual percentage rate of taxation on the income statement, so it is not possible to get the amount of tax expense stated.


Comment on deferred tax assets/liabilities that are reported in the balance sheet and why they have been recorded.

Deferred tax liability has been recorded(Slemrod, 2017, np). It is deferral because it shows the difference in timing between when the tax is accrued and paid. It reported showing that the company will, in the future pay more income tax because a transaction that took place may be in the form of installments.


Is there any current tax assets or income tax payable recorded by your company and why is the income tax payable, not the same as income tax expense?

Yes, it is. The income tax payable as a current liability.

Income tax expense is a calculation that you have that the company owes in taxes based on standard business accounting rules. This is reported on the income statement. On the other hand, Income tax payable is the actual amount the companies owes in taxes based tax rule codes. It appears on the balance sheet as a liability until the tax bill is paid.

Is the income tax expense shown in the income statement same as the income tax paid shown in the cash flow statement? If not why is the difference?

The income tax paid differs from the income tax expense shown in the income statement.

The accounting rules that you use while reporting financial results differ from rules used to prepare income taxes for the business hence, the amount of tax you think your business should pay based on report profit will be completely different from the real tax bill(Zeff,2015,p 43-54). The difference is seen in the company’s financial statement as a disparity between “income tax expense “  and “income tax paid”.

Conclusion of anything new you have gained, confusing or difficult about companies accounts of income tax.

It was difficult to understand the companies deferred tax that is recorded as a liability and is paid for in the future(McGill,2016, p10). It was a new concept but I appreciate am trying to understand more about it. And the fact that the company did not provide the actual percentage tax rate sounds strange. I don’t understand why the company would try to contradict the employees or anyone who may read the financial statements in the near future.

New insights I learned from the company is the adoption of an income tax as well as if a country permits removing federal income taxes against individual income taxes(Myles,2016,p141-156).To focus on factors that have not been largely explored, the flow of income.


-. “Review of financial statements 2: The income statement and the statement of cash flows.” Financial Performance, 2001, pp. 46-73.

“Amount of venture capital invested in Internet-specific companies in the United States.” 2015.

Brodsky, Stanley L. “Highly paid, well-known experts.” Coping with cross-examination and other pathways to effective testimony, pp. 203-215

Kenley, Dr R. “Financing Construction.” 2015

Hills, J., 2007. Ends and means: the future roles of social housing in England.

Zeff, S.A., 2015. “Political” lobbying on proposed standards: A challenge to the IASB. Accounting Horizons16(1), pp.43-54.

McGill, G. and Outslay, E., 2016. Did Enron pay taxes? Using accounting information to decipher tax status. Washington Post, p.A10.

Myles, G.D., 2016. Taxation and economic growth. Fiscal studies21(1), pp.141-168.

Slemrod, J., 2017. The economics of corporate tax selfishness(No. w10858). National Bureau of Economic Research.

Benedict, A. and Elliott, B., 2008. Financial accounting: an introduction. Pearson Education.


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