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Chap012

# Fundamentals of Financial Accounting with Annual Report

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Chapter 12 - Reporting and Interpreting the Statement of Cash Flows CHAPTER 12 REPORTING AND INTERPRETING THE STATEMENT OF CASH FLOWS Student Learning Objectives and Related Assignment Materials Student Learning Objectives Mini- Exercises Exercises Coached Problems Problems (Groups A & B) Skills Development Cases Multi- chapter Material 1. Identify cash flows arising from operating, investing, and financing activities. 1, 2, 8, 13 1, 7*, 13 1 A1, B1 1, 2, 4 2. Report cash flows from operating activities using the indirect method. 2, 3, 4, 5 1, 2*, 3*, 4*, 5*, 6*, 7*, 8, 9, 10, 11, 13, 14, 15, 21 2, 3, 4 A2, A3, A4, B2, B3, B4 5, 6, 7 CC12† 3. Report cash flows from investing activities. 6, 9 13, 16, 17 3, 4, 6 A3, A4, A6, B3, B4, B6 CC12† 4. Report cash flows from financing activities. 7, 9 13, 16, 17 3, 4, 6 A3, A4, A6, B3, B4, B6 CC12† 5. Interpret cash flows from operating, investing, and financing activities. 1, 10, 11, 12 6*, 7*, 9, 10, 13, 14, 17, 18, 19, 20, 22, 23 3, 4, 6 A3, A4, A6, B3, B4, B6 1, 2, 3, 4, 5, 9 CC12† 6. Report cash flows from operating activities using the direct method. 13, 14, 15 21, 22, 23 5, 6 A5, A6, B5, B6 5, 8 Supplement 12A: Reporting Sales of Property, Plant, and Equipment (Indirect Method) 24, 25 7 A7 Supplement 12B: Spreadsheet Approach (Indirect Method) 26 7 * Animated solution included in the PowerPoint Slides. † CC12 is a continuing case that builds on the story of Nicole’s Getaway Spa, introduced in earlier chapters. This case focuses on analyzing transactions and preparing journal entries. This case will be extended in future chapters. 12-1

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Chapter 12 - Reporting and Interpreting the Statement of Cash Flows Overview The difference between operating cash flows and net income has never been so apparent as when Lehman Brothers reported \$11.5 billion in net income and \$94.2 billion in net operating cash outflows during 2006-08, perhaps making it the initial tipping point into a worldwide financial crisis. Students learn how to classify cash flows, interpret both direct and indirect method statements of cash flows, and prepare both formats of statements. Chapter supplements illustrate two additional topics for the indirect method: the cash flow effects of fixed asset disposals (A) and using a spreadsheet to prepare the statement (B). Synopsis of Chapter Revisions New Focus Company: Under Armour New chapter opener New Spotlights contrasting cash flows and net income for W. T. Grant and Lehman Brothers New Spotlight contrasting classification of dividends and interest under GAAP and IFRS New illustrations contrasting indirect and direct methods using Under Armour’s financials New location for detailed discussion of the direct method (last topic in the chapter’s body) Two new questions, seven new exercises, one new problem, and three new cases One new continuing case PowerPoint Slides Student Learning Objective PowerPoint® Slides 1. Identify cash flows arising from operating, investing, and financing activities.
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