Ch14_Wey_Fin_6e

Ch14_Wey_Fin_6e - Chapter 14 14 Statement of Cash Flows...

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Chapter 14-1 Statement of Cash Flows Chapter Chapter 14 14 Financial Accounting, Sixth Edition
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Chapter 14-2 The Statement of The Statement of Cash Flows: Cash Flows: Usefulness and Usefulness and Format Format Preparing the Preparing the Statement of Statement of Cash Flows— Cash Flows— Indirect Method Indirect Method Using Cash Using Cash Flows to Evaluate Flows to Evaluate a Company a Company Usefulness Usefulness Classifications Classifications Significant Significant noncash activities noncash activities Format Format Preparation Preparation Indirect and direct Indirect and direct methods methods Step 1: Operating Step 1: Operating activities activities Step 2: Investing Step 2: Investing and financing and financing activities activities Step 3: Net Step 3: Net change in cash change in cash Free cash flow Free cash flow Statement of Cash Flows Statement of Cash Flows
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Chapter 14-3 SO 1 Indicate the usefulness of the statement of cash flows. Provides information to help assess: 1. Entity’s ability to generate future cash flows. 2. Entity’s ability to pay dividends and obligations. 3. Reasons for difference between net income and net cash provided  (used) by operating activities. 4. Cash investing and financing transactions during the period. Usefulness of the Statement of Cash Flows Usefulness of the Statement of Cash Flows
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Chapter 14-4 SO 2 Distinguish among operating, investing, and financing activities. Classification of Cash Flows Classification of Cash Flows Income Statement  Items Operating Activities Generally Long- Term Asset Items Investing   Activities Generally Long- Term Liability       and         Equity  Items Financing   Activities
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Chapter 14-5 Classification of Typical Inflows and Outflows Classification of Cash Flows Classification of Cash Flows SO 2 Distinguish among operating, investing, and financing activities. Operating activities - Income statement items Cash inflows:    From sale of goods or services.    From interest received and dividends received. Cash outflows:    To suppliers for inventory.    To employees for services.    To government for taxes.    To lenders for interest.    To others for expenses. Illustration 14-1
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Chapter 14-6 Classification of Typical Inflows and Outflows Classification of Cash Flows Classification of Cash Flows SO 2 Distinguish among operating, investing, and financing activities. Investing activities - Changes in investments and long- term assets     Cash inflows:       From sale of property, plant, and equipment.       From sale of investments in debt or equity securities.    From collection of principal on loans to other entities.
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Ch14_Wey_Fin_6e - Chapter 14 14 Statement of Cash Flows...

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