Hard problem with ending cash balance and beginning cash balance

CFA Level I
#1

Net sales 500 (useless)

Increase in acc. receivable : 20

Decrease in acc. payable 40

Increase in inventory 30

sale of common stock: 100

repayment of debt: 10

Depreciation: 2

Net income: 100

interest expense on debt: 5

CFO is: for me it is 12 … IFRS firm choosing interest paying on CFF : 100+2-30-40-20=12

a) 10

b) 12

c) 92

d) 192

CFI: 0

CFF: for me it is 100-10-5= 85

a) 90

b) 98

c) 110

d) 198

Then… change in cash its 97…

If the ending cash balance is 200, the beginning cash balance was:

a) 90

b) 98

c) 110

d) 198

cannot be right this question does it? beginning cash balance must be 103 for it to be 200… what do you think guys?

#2

Where’d you get the 2?

#3

my bad… it is depreciation expense, already edited it

#4

Is this US GAAP or IFRS?

Under US GAAP, interest paid is a CFO outflow, not a CFF outflow.

#5

doesnt specify in the problem but I took it as a IFRS firm, so interest paid can go to CFF, what do you say about the problem? its wrong the part of ending cash balance?

#6

If you treat interest paid as a CFF outflow, then you have to remove it as an outflow from CFO, leaving you with CFO = 17. As that isn’t an option, it appears that interest paid is a CFO outflow. In that case, CFF = 100 − 10 = 90.