Module 3 Lecture 5 - Fall 2010 Module 3 Accounting Finance...

Info icon This preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
David Robinson © D. Robinson, 2010 Fall 2010 Module 3 Accounting & Finance Lecture 5: Statement of Cash Flows Auditing
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Accounting & Finance Accounting Finance Managerial Financial Auditing How investors use their money How firms raise money Three financial statements Forms of business Income St. Balance Sheet St. Cash Flows
Image of page 2
Lecture Outline 1. Why we need the Statement of cash flows 2. Auditing: What it is, why it’s important 3. Audit failures of the late 1990s 4. Sarbanes-Oxley Act as a respons 5. Common sense and auditing 6. Take accounting entries seriously
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Why we need the Statement of Cash Flows 22 Format for the Income Statement Revenues “Net sales” -Expenses COGS ------------- “Gross profit” -Depreciation -SG&A -Interest Income (“Profit”) Tax (Corporate Income Tax) Net Income (“ Bottom line ”) Before tax Net Income/number of shares = “Earnings per share” Format of the Balance Sheet 1. Assets a. Current Assets b. Fixed (or long-term) assets 2. Liabilities a. Current Liabilities b. Long-term Liabilities 3. Owners’ Equity We can’t see if/where dividends were paid, or if and how we raised new money from just the Income St. & Balance Sheet
Image of page 4
Statement of Cash Flows 1 . Cash flows from operations a. + our income b. - building up inventory, more money owed to the firm 2. Investing a. + sale of investments or equipment b. - buying long term PPE 3. Financing a. + Money from stock and bond sales b.- Dividends paid, bonds paid off
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
“Adding Back” Depreciation 1 . Cash flows from operations a. + our income + this year’s depreciation shown on the Income Statement b. - building up inventory, more money owed to the firm Why? It’s a “non-cash expense”
Image of page 6
“Adding Back” Depreciation 1 . Cash flows from operations a. + our income + this year’s depreciation shown on the Income Statement b. - building up inventory, more money owed to the firm Why? It’s a “non-cash expense”
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
“Accumulated Depreciation” End of Year Depreciation Accumulated Depreciation Net asset value (“Book Value”) 1 $3,000 $3,000 $12,000 2 $3,000 $6,000 $9,000 3 $3,000 $9,000 $6,000 4 $3,000 $12,000 $3,000 5 $3,000 $15,000 $ -0- $3,000 is “expensed” each year In Yr 2, whom did we write the check for $3,000 to?
Image of page 8
“Accumulated Depreciation” End of Year Depreciation Accumulated Depreciation Net asset value (“Book Value”) 1 $3,000 $3,000 $12,000 2 $3,000 $6,000 $9,000 3 $3,000 $9,000 $6,000 4 $3,000 $12,000 $3,000 5 $3,000 $15,000 $ -0- $3,000 is “expensed” each year In Yr 2, whom did we write the check for $3,000 to?
Image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern