ch23tc - CHAPTER 23 STATEMENT OF CASH FLOWS Intermediate...

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Chapter 23-1 C H A P T E R C H A P T E R 23 23 STATEMENT OF CASH FLOWS STATEMENT OF CASH FLOWS Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield
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Chapter 23-2 Learning Objectives Learning Objectives
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Chapter 23-3 LO 1 Describe the purpose of the statement of cash flows. Primary purpose: To provide information about a company’s cash receipts and cash payments during a period. Secondary objective: To provide cash-basis information about the company’s operating, investing, and financing activities. Section 1 - Preparation of the Statement of Cash Flows
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Chapter 23-4 LO 1 Describe the purpose of the statement of cash flows. Usefulness of the Statement of Cash Flows Provides information to help assess: 1. Entity’s ability to generate future cash flows. 2. Entity’s ability to pay dividends and obligations. 3. Reasons for differencebetween net incomeand net cash flow from operating activities. 4. Cash and noncash investing and financing transactions.
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Chapter 23-5 LO 2 Identify the major classifications of cash flows. Classification of Cash Flows IncomeStatement Items Operating Activities Generally Long- Term Asset Items Investing Activities Generally Long- Term Liability and Equity Items Financing Activities The term “Cash” = Cash and cash equivalents .
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Chapter 23-6 1 The basis recommended by the FASB for the statement of cash flows is actually “cash and cash equivalents.” Cash equivalents are short-term, highly liquid investments that are both: (a) readily convertible to known amounts of cash, and (b) so near their maturity that they present insignificant risk of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under this definition. Examples of cash equivalents are Treasury bills, commercial paper, and money market funds purchased with cash that is in excess of immediate needs. Cash and Cash Equivalent Text Footnote1, page1245 LO 2 Identify the major classifications of cash flows. Classification of Cash Flows
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Chapter 23-7 Classification of Typical Inflows and Outflows LO 2 Identify the major classifications of cash flows. Classification of Cash Flows Illustration 23-1 Income Statement Items
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Chapter 23-8 Classification of Typical Inflows and Outflows LO 2 Identify the major classifications of cash flows. Classification of Cash Flows Generally Long- Term Asset Items Illustration 23-1
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Chapter 23-9 Classification of Typical Inflows and Outflows LO 2 Identify the major classifications of cash flows. Classification of Cash Flows Illustration 23-1 Generally Long- Term Liability and Equity Items
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Chapter 23-10 Typical Company Product Life Cycle LO 2 Identify the major classifications of cash flows. Classification of Cash Flows
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Chapter 23-11 LO 2 Identify the major classifications of cash flows.
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