ACCT101-Handout12

ACCT101-Handout12 - Handout#12 3 Indirect and direct...

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Acct 101 L12, L13, L16 Handout #12 1 Statement of Cash Flows Purpose of cash flow statements Cash flow activities: Operating Indirect method a. Start with Net Income. b. Remove expenses or revenues that do not involve cash inflows/outflows. (For example, add back amortization or bad debts expenses.) c. Remove non-operating items from Net Income (by adding back non-operating losses and subtracting non-operating gains.) d. Adjusting for the changes in non-cash current assets and current liabilities relating to operating activities. Direct method Cash received from customers Cash paid to suppliers Cash paid for operating expenses Cash paid for income taxes Cash paid for interests
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Acct 101 L12, L13, L16 Handout #12 2 Cash flow activities: Investing Cash flow activities: Financing Noncash Investing and Financing Activities E 13-7 Cash flows from operating activities—indirect method E 13-11 Cash flows from operating activities—direct method
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Acct 101 L12, L13, L16
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Unformatted text preview: Handout #12 3  Indirect and direct method (AP 13-1, 13-2, page 704-705) 1. Indirect method McPherson Construction Supply Company Statement of Cash Flows Cash flows from operating activities: Net cash provided by operating activities Cash flows from investing activities: Cash flows from financing activities: Acct 101 L12, L13, L16 Handout #12 4 2. Direct method McPherson Construction Supply Company Statement of Cash Flows For the Year Ended December 31, 2004 Cash flows from operating activities: Net cash provided by operating activities Cash flows from investing activities: Cash payments to purchase fixed assets (17,430) Cash flows from financing activities: Cash payments for dividends (8,300) Cash payments on long-term note (4,980) Cash receipts from issuing stock 13,280 Net cash provided by financing activities -- Net increase in cash during the year 4,150 Cash balance, January 1, 2004 24,070 Cash balance, December 31, 2004 €28,220...
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ACCT101-Handout12 - Handout#12 3 Indirect and direct...

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