ACC Test 2 review - Chapter 5 Statement of cash flows o...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 5 Statement of cash flows o Direct format: Cash Flow from operating Activities: Cash received from Operating activities – Cash paid for operating activities = Net Cash from (for) Operating Activities Cash flow from Investing Activities: Cash received from Investing Activities – Cash Paid for Investing activities = Net Cash from (for) investing activities Cash flow from Financing activities: Cash received from Financing activities – Cash paid fro Financing activities = Net cash from (for) Financing activities o Indirect format: The difference between direct and indirect formats are in the operating section only Cash Flow from Operating Activities: Net Income + Adjustment to Net Income = Net cash from (for) operating activities Net Income + Depreciation and Amortization Expense - Increases in Current Asset Accounts + decreases in Current Asset Accounts + increases in current Liability accounts - Decreases in Current liability accounts = Cash flow from operating activities Cash flow patterns and the Financial health of a company A B C D Operating Cash Flows + - + +/- Investing cash flows - + - + Financing cash flows + + - - o A) These normally are a sign of a prosperous and growing company o B) The company is facing serious financial problems. It is selling assets and using financing activities to meet current cash needs o C) The company is prosperous but may not have a lot of good growth opportunities. It is operating cash to pay off debt and pay stockholders o D) The company may be facing a current cash flow problem. It is selling assets to supplement current cash flows to cover its financing needs. Dividends are a reduction in retained earnings and are reported on the statement of stockholders’ equity Dividends= Net income – (difference in retained earnings) Chapter 8 Annuity- series of EQUAL amounts received or paid over a specified number of EQUAL time periods Chapter 9 Liabilities—an organization’s obligations to deliver payments, goods, or services in the future o Notes payable, accounts payable, interest payable, wages payable, unearned revenue Three Attributes of a liability: o A present responsibility exits to transfer resources to another entity at some future time o The organization cannot chose to avoid the transfer o The event creating the responsibility has already occurred
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/27/2008 for the course ACC 310F taught by Professor Verduzco during the Spring '07 term at University of Texas at Austin.

Page1 / 3

ACC Test 2 review - Chapter 5 Statement of cash flows o...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online