Canada [Help] Cash Flow Statements (Operation Activities)

[Jazzies]

Hello,
I'm doing some homework and I'm really stumped on something. My class did a practice question in class, I just don't understand this sections.

I took Net Income, and I made the following adjustments to non-cash transactions (such as depreciation and gains/losses, interest expense, income tax expense).
But on my notes, my teacher excluded "Other Expenses".

How is other expenses not considered a non-cash transaction? Yet other expenses, such as Interest Expense and Income Tax Expense are considered cash-transactions? It's really confusing.

I compare Cash-Transactions to Sales and General Admin. Expense because I think of it as paying salaries - therefore having a cash outflow. Is that the right way to think of it?

 

[kirby]

Other expenses are ordinarily cash transactions.
So consult with your teacher to see why not in that practice question.

 

[Jazzies]

Other expenses are ordinarily cash transactions.
So consult with your teacher to see why not in that practice question.

Are they really cash transactions?
Because my teacher told me to take all the "non-cash" transactions and adjust them from net income (like depreciation).
If it is a cash transaction then that means he is correct not including it?
(Thanks for the reply by the way!)

 

[kirby]

In preparing a real cash flow statement, you would remove the non-cash transactions you are aware of. Other expenses typically are paid for in cash, but there can be exceptions.

In a homework problem, if they wanted you to exclude all or part of the other expenses there would be some clue in the problem.For example, a statement like "None of the other expenses were paid for - all were accrued in the Accounts Payable account."

If there is no such clue, the assumption should be that ALL of the other expenses are from cash transactions. Since the instructor excluded those, there must be some reason and the only person who can answer that is your instructor.

 

[Jazzies]

In preparing a real cash flow statement, you would remove the non-cash transactions you are aware of. Other expenses typically are paid for in cash, but there can be exceptions.

In a homework problem, if they wanted you to exclude all or part of the other expenses there would be some clue in the problem.For example, a statement like "None of the other expenses were paid for - all were accrued in the Accounts Payable account."

If there is no such clue, the assumption should be that ALL of the other expenses are from cash transactions. Since the instructor excluded those, there must be some reason and the only person who can answer that is your instructor.

Thank you Kirby, this helped me a lot! (There were no such clues)