Lecture09 2010.10.05 PreClass

Lecture09 2010.10.05 PreClass - Lecture 9 Statement of Cash...

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Lecture 9 1 Statement of Cash Flows and Cash Flow Analysis
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Announcements • Those requesting absences should have received an email with date/time/location of the make-up exam • Exam #1: 10/14, 6-8pm • Locations: Alphabetical by Last Name 2 A to F JMHH G06 G to Jiang SHDH 350 Jivani to Levit SHDH 351 Leylegian to Saborio CHEM 102 Saed to Yoo COHN G17 Yoshida to Zhu COHN 402
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Announcements • Recitation this week: P13-2, E13-9, CP13-2 Any other questions • No recitations next week (Oct 15) 3 • TAs holding office hours next week. • Corrected some typos in solutions to Practice Exam
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Today’s Class • Recap of Last Class • Finish Simpson Corp example 4
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Recap: Statement of Cash Flows Purpose of Statement of Cash Flows is to reconcile why Net Income is different than change in Cash balance Stated differently, the Statement shows us how the change in Cash balance materialized The Statement of Cash Flows is broken down into three sections: Cash Flows from Operations Cash Flows from Investing Cash Flows from Financing What do we learn by partitioning cash flows this way?
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Statement of Cash Flows: Cash Flows from Financing Cash Flows from Financing include all cash flows in and out related to Obtaining debt (acting as a borrower) Issuing or repurchasing stock Paying dividends Accounts Payable are considered to generate from normal business Paying off principal related to debt operations, so they show up in the Cash Flows from Operations section Interest expense payments do not belong in this section. They are considered part of normal business operations, so they show up in the Cash Flows from Operations section
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Statement of Cash Flows: Cash Flows from Investing Cash Flows from Investing include cash flows in and out related to Purchasing or selling longer-term productive assets (land, equipment, etc.) Purchasing or selling investment securities (stocks, derivatives, bonds, etc.) Lending (i.e. providing loans)
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Method of Calculation Cash Flows from Financing and Investing Direct Method : analyze all transactions that affect the cash account; then group the transactions into common activities and report how these activities affected cash Cash Flows from Operations Direct Method : analyze all transactions that affect the cash account; then group the transactions into common activities and report how these activities affected cash. Indirect Method
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This note was uploaded on 12/18/2010 for the course ACCT 101 taught by Professor Armstrong during the Fall '09 term at UPenn.

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Lecture09 2010.10.05 PreClass - Lecture 9 Statement of Cash...

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