Chapter 12 class notes (Kimmel)

Accounting: Tools for Business Decision Making

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Chapter 12 Statement of Cash Flows (Indirect Method only – omit appendix pgs. 611 – 620) Purpose of a Statement of Cash Flows To report all major cash receipts (inflows) and cash payments (outflows) during a period. This report classifies cash flows into operating, investing, and financing activities. Answers the following questions: How does a company obtain its cash? Where does a company spend its cash? What is the change in the cash balance? Classifying Cash Flows Three categories: Operating activities include transactions and events that determine net income. Specific examples: 1. Cash inflows from cash sales, collections on credit sales, receipts of dividends and interest. 2. Cash outflows for payments to suppliers for goods and services, to employees for wages, payments for all other operating expenses, payments of interest and income taxes.
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Investing activities include transactions and events that affect long-term assets. Specific examples:
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Chapter 12 class notes (Kimmel) - Chapter 12 Statement of...

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