Summary Business Accounting

Question:

Refer to the situation described in Exercise 4–12.

Required:

How might your solution differ if Bluebonnet Bakers prepares the statement of cash flows according to

International Financial Reporting Standards?



Answer:



Cash collected for interest, considered an operating cash flow by U.S. GAAP, could be classified as

either an operating cash flow or an investing cash flow according to International Accounting Standards.

Cash paid for interest, considered an operating cash flow by U.S. GAAP, could be classified as either an

operating cash flow or a financing cash flow according to International Accounting Standards.

Cash paid for dividends, considered a financing cash flow by U.S. GAAP, could be classified as either an

operating cash flow or a financing cash flow according to International Accounting Standards.

Accordingly, the statement of cash flows prepared according to IFRS could be the same as under U.S.

GAAP (E4–12) or could be presented as follows:



BLUEBONNET BAKERS

Statement of Cash Flows

For the Year Ended December 31, 2013



Cash flows from operating activities:

Collections from customers $ 380,000

Purchase of inventory (160,000)

Payment of salaries (90,000)

Payment of dividends (20,000)