1.

Explain cash flow from operating transactions of non-finance companies and finance companies.

Answer»

(A) Non-Finance Companies :

1. Cash Inflow:

  • Receipt/Income from sale of goods or service,
  • Collection from debtors and bills receivable,
  • Income of royalty, commission and brokerage,
  • Income tax refund (except financing activity),
  • Any other income which is not arising from investing activities.

2. Cash Outflow :

  • Payment on purchase of goods or service,
  • Payment to creditors and bills payable,
  • Factory expenses,
  • Administrative and selling-distribution expenses,
  • wages, salary, rent, bonus,
  • Employees welfare expenses,
  • Income tax paid (except financing activity).

(B) Finance Companies :

1. Cash Inflow :

  • Sale of securities,
  • Interest received on securities,
  • Interest received on lended loan,
  • Income tax refund (except financing activity).

2. Cash Outflow :

  • Purchase of securities,
  • Interest paid on deposit/loan,
  • salary or amount paid to employees e.g. bonus,
  • Income tax paid (except financing activity).


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