Downloaded 61 times
Uploaded byVCE Accounting - Michael Allison
12.5 Operating Activities
The document defines operating activities as cash flows resulting from the day-to-day provision of goods and services by a business. It notes that operating activities include cash inflows from customers for sales of goods and services, as well as cash outflows to pay employees and suppliers. The document then provides an example cash flow statement for a business for the month ended June 30, 2015, showing cash inflows of $50,000 from cash sales, $10,000 from debtors, and $5,000 in GST collected, and cash outflows of $30,000 for stock purchases, $3,000 for advertising, $14,000 for wages, $3,000 for cleaning, and $4,000
In this document
Powered by AI
Introduction to operating activities and their role in business.
Details cash inflows and outflows in daily operations involving goods and services.
Illustrates a comprehensive cash flow statement for the month ended June 30, 2015, with detailed figures.
Compares cash flow statement figures with income statement, highlighting similarities and key components.
Specific illustrations of stock purchase and sale transactions, detailing cash flow and income statement impacts.
In-class homework tasks assigned for further practice on the topic.
More Related Content
Similar to 12.5 Operating Activities
More from VCE Accounting - Michael Allison
12.5 Operating Activities
- 1.
- 2. © Michael Allison,Trinity Grammar School. Author’s permission required for external use 12.5 OPERATING ACTIVITIES Operating Activities Cash flows resulting from the provision of goods and services in the day-to-day operations of the business • Cash inflows from selling goods and services to customers • Cash outflows from payments to employees and suppliers of goods and services
- 3. © Michael Allison,Trinity Grammar School. Author’s permission required for external use Operating Activities The firm should always expect a POSITIVE net cash flow from Operating Activities. Why? Because these are the cash flows from the provision of goods and services in the day- to-day operations of the business Operating cash flows are from buying and selling stock The firm should be selling stock for more than they buy it for and for an amount that covers their expenses 12.5 OPERATING ACTIVITIES Cash Flow Statement for the month ended 30 June 2015 $ $ Cash Flows from Operating Activities Cash sales 50000 Receipts from debtors 10000 GST collected 5000 Cash purchases of stock (30000) Advertising (3000) Wages (14000) Cleaning (3000) GST paid (4000) Net Cash Flow from Operating Activities 11000
- 4. © Michael Allison,Trinity Grammar School. Author’s permission required for external use Cash Flow Statement for the month ended 30 June 2015 $ $ Cash Flows from Operating Activities Cash sales 50000 Receipts from debtors 10000 GST collected 5000 Cash purchases of stock (30000) Advertising (3000) Wages (14000) Cleaning (3000) GST paid (4000) Net Cash Flow from Operating Activities 11000 Cash Flow Statement for the month ended 30 June 2015 $ $ Cash Flows from Operating Activities Cash sales 50000 Receipts from debtors 10000 GST collected 5000 Cash purchases of stock (30000) Advertising (3000) Wages (14000) Cleaning (3000) GST paid (4000) Net Cash Flow from Operating Activities 11000 Cash Flow Statement for the month ended 30 June 2015 $ $ Cash Flows from Operating Activities Cash sales 50000 Receipts from debtors 10000 GST collected 5000 Cash purchases of stock (30000) Advertising (3000) Wages (14000) Cleaning (3000) GST paid (4000) Net Cash Flow from Operating Activities 11000 Cash Flow Statement for the month ended 30 June 2015 $ $ Cash Flows from Operating Activities Cash sales 50000 Receipts from debtors 10000 GST collected 5000 Cash purchases of stock (30000) Advertising (3000) Wages (14000) Cleaning (3000) GST paid (4000) Net Cash Flow from Operating Activities 11000 Section heading Cash inflows Listed before outflows in 1st column Cash outflows Listed after inflows in 1st columnSection ending Listed in 2nd column and down a row 12.5 OPERATING ACTIVITIES
- 5. © Michael Allison,Trinity Grammar School. Author’s permission required for external use Operating Activities Similar to the figures in the Income Statement as many of the cash flows from providing goods are also Revenues and Expenses… Cash Flow Statement Income Statement Cash sales Cash sales Credit sales Expenses paid in cash Expenses paid in cash Receipts from debtors GST collected Expenses paid on credit Cash purchases of stock Payments to creditors Stock loss Stock gain Discount expense Discount revenue GST paid Cost of sales Cash sales Credit salesReceipts from debtorsGST collected Stock gainDiscount revenueExpenses paid in cashExpenses paid on creditCash purchases of stockCost of salesPayments to creditorsStock lossDiscount expenseGST paid 12.5 OPERATING ACTIVITIES
- 6. © Michael Allison,Trinity Grammar School. Author’s permission required for external use 12 April Firm purchases $1,000 stock (plus $100 GST) for cash from suppliers Cash Flow Statement Purchase of stock ($1,000) GST paid ($100) Income Statement $0 23 April Firm sells stock for $1,800 (plus $180 GST) for cash (the cost of sale was $1,000) Cash Flow Statement Cash sales $1,800 GST collected $180 Income Statement Cash sales $1,800 Cost of sale $1,000 Revenues Earned -- Expenses Incurred Net Profit/ Loss = Cash Inflows -- Cash Outflows Net or in Cash = $1,800 $1,000$800 $1,980 $1,100$880 12.5 OPERATING ACTIVITIES
- 7. © Michael Allison,Trinity Grammar School. Author’s permission required for external use 7 April Firm purchases $1,500 stock (plus $150 GST) for cash from suppliers Cash Flow Statement Purchase of stock ($1,500) GST paid ($150) Income Statement $0 15 April Firm sells stock for $2,800 (plus $280 GST) on credit (the cost of sale was $1,500) Cash Flow Statement $0 Income Statement Credit sales $2,800 Cost of sale $1,500 28 April Firm collects $3,080 from debtor in full settlement of account. Cash Flow Statement Receipt from debtor $3,080 Income Statement $0 Revenues Earned -- Expenses Incurred Net Profit/ Loss = Cash Inflows -- Cash Outflows Net or in Cash = $2,800 $1,500$1,300 $3,080 $1,650$1,430 12.5 OPERATING ACTIVITIES
- 8. © Michael Allison,Trinity Grammar School. Author’s permission required for external use 9 April Firm purchases $2,000 stock (plus $200 GST) on credit from suppliers Cash Flow Statement $0 Income Statement $0 17 April Firm sells stock for $4,200 (plus $420 GST) for cash (the cost of sale was $2,000) Cash Flow Statement Cash sales $4,200 GST collected $420 Income Statement Cash sales $4,200 Cost of sale $2,000 29 April Firm repays creditor $2,200 in full settlement of account. Cash Flow Statement Payment to creditor $2,200 Income Statement $0 Revenues Earned -- Expenses Incurred Net Profit/ Loss = Cash Inflows -- Cash Outflows Net or in Cash = $4,200 $2,000$2,200 $4,620 $2,200$2,420 12.5 OPERATING ACTIVITIES
- 9. © Michael Allison,Trinity Grammar School. Author’s permission required for external use 2 April Firm purchases $2,500 stock (plus $250 GST) on credit from suppliers Cash Flow Statement $0 Income Statement $0 12 April Firm sells stock for $5,000 (plus $500 GST) on credit (cost of sale was $2,500) Cash Flow Statement $0 Income Statement Credit sales $5,000 Cost of sale $2,500 18 April Firm repays creditor $2,750 in full settlement of account. Cash Flow Statement Payment to creditor $2,750 Income Statement $0 30 April Firm collects $5,500 from debtor in full settlement of account. Cash Flow Statement Receipt from debtor $5,500 Income Statement $0 Revenues Earned -- Expenses Incurred Net Profit/ Loss = Cash Inflows -- Cash Outflows Net or in Cash = $5,000 $2,500$2,500 $5,500 $2,750$2,750 12.5 OPERATING ACTIVITIES
- 10. © Michael Allison,Trinity Grammar School. Author’s permission required for external use TASK In-class Homework Ex12.1 X Ex12.2 X