1.3 ACIS211_Lecture_three

1.3 ACIS211_Lecture_three - ACIS211 Lecture three NZ IAS 7...

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ACIS211 Lecture three NZ IAS 7 Cash flow statements
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Objectives Understand how the statement of cash flows provides different perspectives from the other statements Be able to define ‘cash’ and ‘cash equivalents’ Be able to classify cash flow statements Construct a cash-flow statement in conformity with NZ IAS 7 Understand the differences between cash flows from operations, investing, and financing activities Understand the contractual implications of the statement of cash flow
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Comparisons Balance sheet (statement of financial position) Shows financial position at a certain date Income statement (statement of comprehensive income) Shows profit or loss that has been generated for a period of time using accrual accounting Cash-flow statement Explains the movements in cash and cash equivalents for a given period Provides a reconciliation of opening and closing total of cash and cash equivalent balances appearing in the balance sheet Indicates sources of cash in terms of cash flows from operations, investing, and from financing
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Cash and cash equivalents Cash — cash on hand (notes and coins held) and demand deposits (deposits on call with a financial institution) Cash equivalents Highly liquid investments with short periods to maturity that are readily convertible to cash on hand at the investor’s option and are subject to an insignificant risk of changes in value Borrowings that are integral to the cash management function and are not subject to a term facility
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Classification of cash flows NZ IAS 7 classifications: Operating activities the principal revenue-producing activities of the entity and other activities that are not investing and financing activities i.e. relate to the provision of goods and services, and other activities that
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1.3 ACIS211_Lecture_three - ACIS211 Lecture three NZ IAS 7...

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