Cash%20Flow%20Statement%20Spring%202010

Cash%20Flow%20Statement%20Spring%202010 - The $tatement of...

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Unformatted text preview: The $tatement of Ca $ h Flow $ Its All About the CA$H !!! US Dollars Euros British Pounds Japanese Yens Swiss Francs Chinese Yuans Russian Rubles Saudi Riyals Mexican Pesos Purposes of the Cash Flow Statement 1) Explain the Change in Cash (all cash receipts and payments) From the Beginning of the Period To the End of the Period Purposes of the Cash Flow Statement 1) Provide Information On: All Investing Activities All Financing Activities Cash and Cash Equivalents For Purposes of the Cash Flow Statement, Cash Includes Both Cash and Cash Equivalents Cash and Cash Equivalents Cash Equivalents Are Highly Liquid Short-term Investments Such as Treasury Bills That Have Maturities of 3 Months or Less Cash and Cash Equivalents Cash Equivalents Are Virtually the Same as Cash Since They Can Be Converted to Cash Immediately Without Much Loss in Value IAS 7: Cash Flows Statements Cash Equivalents Must Have a Short Maturity (3 Months or Less) Cash Includes Cash on Hand & In Demand Deposits It Also Includes Bank Overdrafts (But U.S. GAAP Does Not) The Statement of Cash Flows Cash flows Are Classified into 3 Activities : 1. Cash provided (used) by Operating Activities 2 Methods: Direct & Indirect 2. Cash provided (used) by Investing Activities 3. Cash provided (used) by Financing Activities All Is the Same in IAS 7 The Statement of Cash Flows The Sum of These 3 Categories, Operating, Investing & Financing Must Equal the Change in Cash & Cash Equivalents Over the Period Operating Activities Cash Effects of Transactions that Enter Into the Determination of Net Income This Includes Cash Paid For: Income Taxes and Interest Operating Cash Flows Thus, These Are the Cash Flows Corresponding to the Accrual-Based Revenues & Expenses in Net Income Or Net Loss IAS 7: Cash Flows Statements The Cash Flows Relating to Operating Activities Can Be Presented Using: The Direct Method : The Firm Reports Major Groups of Cash Receipts and Cash Outflows Examples of Operating Cash Flows Cash Received from Sales of Goods & Services Cash Paid to Suppliers Cash Paid to Employees Cash Paid/Received Due to Income Taxes International Accounting Standard 7 The direct method provides information which may be useful in estimating future cash flows and which is not available under the indirect method . The Direct Method Its Use Is Encouraged By Both the FASB and the IASB Most U.S. Firms Use the Indirect Method Cash from Operations: The Indirect Method A = L + E A = L + E Cash + Non-Cash Assets = L + E Cash = L + E...
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This note was uploaded on 02/17/2010 for the course MIS 042 taught by Professor Herrin during the Spring '10 term at University of Texas at Austin.

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Cash%20Flow%20Statement%20Spring%202010 - The $tatement of...

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