Statement of Cash Flows

Statement of Cash Flows - STATEMENT OF CASH FLOWS Lesson...

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STATEMENT OF CASH FLOWS Lesson Twelve
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STATEMENT OF CASH FLOWS z There are two methods of preparing this statement: Direct method Indirect method
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STATEMENT OF CASH FLOWS z Three sections on the statement: Operating Activities Investing Activities Financing Activities
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COMPONENTS OF OPERATING ACTIVITIES Net Income + Depreciation, Amortization, and Depletion Expense + Decreases in Current Assets other than Cash or Marketable Securities - Increases in Current Assets other than Cash or Marketable Securities
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MORE COMPONENTS OF OPERATING ACTIVITIES + Increases in Current Liabilities other than Short-Term Notes Payable - Decreases in Current Liabilities other than Short-Term Notes Payable + Losses - Gains
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EXAMPLES OF OPERATING ACTIVITIES Depreciation Expense is added back to net income because it is a non-cash charge, an expense that doesn’t use cash.
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EXAMPLES OF OPERATING ACTIVITIES z If your Accounts Receivable increase, your customers are using your money. From the standpoint of cash, this is bad. The increase would be a negative under Operating Activities
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EXAMPLES OF OPERATING ACTIVITIES z If your Accounts Payable decrease, it means that you have paid bills. From the standpoint of cash, this is bad. The decrease would be a negative under Operating Activities.
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COMPONENTS OF INVESTING ACTIVITIES + Cash received from the sale of Property, Plant, or Equipment - Cash paid for the purchase of Property, Plant, or Equipment + Cash received from the sale of investments. - Cash paid for the purchase of investments .
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Cash received from the sale of a building. Cash paid for equipment.
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Statement of Cash Flows - STATEMENT OF CASH FLOWS Lesson...

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