Lecture09 - Lecture 9 Cash Flow Analysis 1 A Useful...

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1 Lecture 9 Cash Flow Analysis
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2 A Useful Template When Constructing the Operating Section OPERATING CURRENT ASSETS OPERATING CURRENT LIABILITIES INCREASE - + DECREASE + -
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3 Prepare T-accounts 1. Prepare a master T-account for cash. Make this a relatively large account because you will use this account to record the cash inflows (debits) and outflows (credits). 2. Prepare T-accounts for all of the other balance sheet accounts. 3. In all of the T-accounts, including the cash account, enter the beginning and ending balances.
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4 Analyze the accounts 4 a) Determine the changes (debit/credit) in each of the non-cash accounts and enter them in the accounts, appropriately. b) Complete each entry by recording an appropriate amount in the cash account. That is, for each debit (credit) you record in a non-cash account, record a credit (debit) amount in the cash account (if appropriate). c) Make sure that each of your entries balances. That is, make sure that the total of the debits that you have recorded equals the total of the credits.
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5 Report the cash inflows and outflows 5. If you have specific information that a financing or investing transaction was wholly or partly a non-cash transaction, enter the information in the non-cash accounts appropriately. Again, make sure that your entry balances. 6. If you have done the analysis correctly, the cash account contains all of the cash inflows (debits) and outflows (credits). 7. Prepare the cash flow statement. Organize and report the inflows and outflows as operating, financing and investing.
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6 P13-4 – Beta Company Income Statement Sales Revenue $20,600 Expenses Cost of goods sold
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This note was uploaded on 05/20/2010 for the course ACCT 101 taught by Professor Briancadman during the Spring '10 term at Penn College.

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Lecture09 - Lecture 9 Cash Flow Analysis 1 A Useful...

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