Chapter 12--revised

Chapter 12--revised - Chapter12 Cash Flows and Net Income...

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Chapter 12 The Statement of Cash Flows
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Cash Flows and Net Income for Four Companies in 2006 Best Buy Gateway Northwest Airlines Circuit City Increase (Decrease) Net Income in Cash (Loss) $ 225.0 $ 984.0 33.9 (567.6) (439.0) (862.0) (174.9) (8.3) (in millions)
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Purpose of the Statement of Cash Flows Explains changes in cash over a period of time Makes students crazy (crazier???) Summarizes cash inflows and outflows from Operating Activities Financing Activities Investing Activities
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Statement of Cash Flows Format Classified by: Operating activities Investing activities Financing activities inflows Cash Increase or decrease in cash and cash equivalents + Beginning Cash and Cash Equivalents = Ending Cash and Cash Equivalents = LO3
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Cash flows from operating activities: Adjustments for Inflows $ xxx Adjustments for Outflows (xxx ) Net cash provided (used) by operating activities $xxx Cash flows from investing activities: Inflows $ xxx Outflows (xxx ) Net cash provided (used) by investing activities xxx Cash flows from financing activities: Inflows $ xxx Outflows (xxx ) Net cash provided (used) by financing activities xxx Net increase (decrease) in cash and cash equivalents $xxx Cash and cash equivalents at beginning of year xxx Cash and cash equivalents at end of year $xxx Statement of Cash Flows Format from balance sheets
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Cash transactions concerned with acquiring and selling products and services Payment of taxes Payment of wages Operating Activities Collection of customer accounts Payment to suppliers for inventory
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Cash transactions concerned with acquiring and disposing of long- term assets Purchase/sale of another company Investing Activities Sale of property, plant and equipment Capital expenditures
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Cash transactions concerned with the raising and repayment of funds in the form of debt and equity Issuance/retirement of bonds Financing Activities Issuance/repurchase of stock Payment of dividends Issuance/repayment of bank note
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