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f4 - Statementof CashFlows Copyright Doug Hillman 2000...

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© Copyright Doug Hillman 2000 Statement of  Cash Flows
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© Copyright Doug Hillman 2000 Purpose of Statement of Cash  Flows Provide information about cash receipts and payments during an accounting period Helps us see how financial position changes during an accounting period Only statement that collects and shows in one statement the causes of changes in cash during a financial reporting period
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© Copyright Doug Hillman 2000 Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are
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© Copyright Doug Hillman 2000 Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are » Readily convertible to known amounts of cash
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© Copyright Doug Hillman 2000 Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are » Readily convertible to known amounts of cash » So near maturity that they are not likely to change in value due to changes in interest rates
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© Copyright Doug Hillman 2000 Classification of Cash Receipts  and Cash Payments Operating activities Investing activities Financing activities
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© Copyright Doug Hillman 2000 Operating Activities Transactions that generally involve producing and delivering goods and providing services Inflows » selling goods and services, interest and dividend revenue Outflows » inventory, salary exp, interest exp
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© Copyright Doug Hillman 2000 Investing Activities Buying and selling plant assets and securities, and making loans and collecting on them Inflows » sale of plant assets and investment securities, collecting loans Outflows » purchasing plant assets, investment securities
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© Copyright Doug Hillman 2000 Financing Activities Obtaining resources from owners and providing return, and obtaining resources from creditors and repaying principal Inflows » issuing stock, bonds, other short and long-term borrowing Outflows » purchasing treasury stock, repaying principal, cash dividends
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1 © Copyright Doug Hillman 2000 Other Cash Flow Considerations Generally, information on gross receipts and payments more relevant » When issuing long-term debt to retire other debt, show both Noncash investing and financing » Acquiring plant assets by issuing notes payable » Converting bonds payable into common stock
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