Analyze the statement of cash flow for the year 2020 and compare it with the year 2019. Identify and explain 5 of the most important issues. Shawanaga First Nation Consolidated Statement of Cash Flows Year Ended March 31 2020 2019 Cash and cash equivalents derived from (applied to) Operating transactions Annual surplus Non-cash changes to operations: 1,081,207 476,827 Amortization of tangible capital assets Loss (earnings) from investment in government 564,921 579,751 business enterprise 117,480 56,619 Gain on disposal of tangible capital assets Changes in non-cash working capital items: 673,192 17,344 Receivables -240,880 -237,266 Inventory for resale 24,181 -69,820 Prepaids and deposits -1,733 -40,149 Payables and accruals 64,728 254,548 Funding repayable -6,245 61,353 Deferred contributions -667,028 350,631 1,609,823 1,449,838 Financing transactions Repayment of long-term debt -96,360 -67,381 Proceeds on issuance of long-term debt 545,142 182,400 Advances (repayments) from related parties -109 44,234 Repayment of obligation under capital lease -2,160 -2,032 446,513 157,221 Investing transactions Decrease (increase) in restricted cash -145,478 383,234 Distribution from investments 0 47,000 Payments received on mortgages receivable 84,119 33,859 Net advances of loan receivable 0 6,172 -61,359 470,265 Capital transactions Purchase of tangible capital assets -1,541,973 -1,933,142 -1,541,973 -1,933,142 Net increase in cash and cash equivalents Cash and cash equivalents 453,004 144,182 Beginning of year 1,928,561 1,784,379 End of Year 2,381,565 1,928,561
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
3. Analyze the statement of cash flow for the year 2020 and compare it with the year 2019. Identify and explain 5 of the most important issues.
| Shawanaga First Nation | ||
| Consolidated Statement of Cash Flows Year Ended March 31 | 2020 | 2019 |
| Cash and cash equivalents derived from (applied to) | ||
| Operating transactions | ||
| Annual surplus Non-cash changes to operations: | 1,081,207 | 476,827 |
| Amortization of tangible capital assets Loss (earnings) from investment in government | 564,921 | 579,751 |
| business enterprise | 117,480 | 56,619 |
| Gain on disposal of tangible capital assets Changes in non-cash |
673,192 | 17,344 |
| Receivables | -240,880 | -237,266 |
| Inventory for resale | 24,181 | -69,820 |
| Prepaids and deposits | -1,733 | -40,149 |
| Payables and accruals | 64,728 | 254,548 |
| Funding repayable | -6,245 | 61,353 |
| Deferred contributions | -667,028 | 350,631 |
| 1,609,823 | 1,449,838 | |
| Financing transactions | ||
| Repayment of long-term debt | -96,360 | -67,381 |
| Proceeds on issuance of long-term debt | 545,142 | 182,400 |
| Advances (repayments) from related parties | -109 | 44,234 |
| Repayment of obligation under capital lease | -2,160 | -2,032 |
| 446,513 | 157,221 | |
| Investing transactions | ||
| Decrease (increase) in restricted cash | -145,478 | 383,234 |
| Distribution from investments | 0 | 47,000 |
| Payments received on mortgages receivable | 84,119 | 33,859 |
| Net advances of loan receivable | 0 | 6,172 |
| -61,359 | 470,265 | |
| Capital transactions | ||
| Purchase of tangible capital assets | -1,541,973 | -1,933,142 |
| -1,541,973 | -1,933,142 | |
| Net increase in cash and cash equivalents Cash and cash equivalents | 453,004 | 144,182 |
| Beginning of year | 1,928,561 | 1,784,379 |
| End of Year | 2,381,565 | 1,928,561 |
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