C1 Chapter 12

C1 Chapter 12 - 12-1Chapter 12The Statement of Cash...

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Unformatted text preview: 12-1Chapter 12The Statement of Cash FlowsFinancial Accounting 1stCanadian ed. by PNCS-B12-2Cash Flows and Net Income for CN200220032004Increase(Decrease) Net Incomein Cash(Loss)$ (28)$ 533105734171,297(in millions)12-3Purpose of the Statement of Cash FlowsExplains changes in cash over a period of timeOperatingActivitiesFinancingActivitiesInvestingActivitiesSummarizes cash inflows and outflows from:12-4Cash Equivalents123456789101112131415161718192021222324252628293031271234567891011121314151617181920212223242526282930312712345678910111213141516171819202122232425262829303127Readily convertible to cashLittle risk of price changeOriginal maturity to investor of three months or lessExamples:Commercial paperCertain money market funds12-5Statement of Cash Flows FormatClassified by:Operating activitiesInvesting activitiesFinancing activitiesoutflowsinflowsCashIncrease or decrease in cashBeginningCash+= EndingCash =12-6Statement of Cash Flows FormatCash flows from operating activities:Inflows$ xxxOutflows(xxx)Net cash provided (used) by operating activities$ xxxCash flows from investing activities:InflowsxxxOutflows(xxx)Net cash provided (used) by investing activitiesxxxCash flows from financing activities:InflowsxxxOutflows(xxx)Net cash provided (used) by financing activitiesxxxNet increase (decrease) in cash and cash equivalentsxxxCash and cash equivalents at beginning of year xxxCash and cash equivalents at end of year$ xxxfrom balance sheets12-7Cash transactions concerned with acquiring and selling products and services Make Inventory PurchasesSell Products and Services Incur Employee Salaries and Wages Incur Utility andother OperatingCostsOperating Activities12-8Cash transactions concerned with acquiring and disposing of long-term assetsPurchase/Sell Intangible Assets (i.e. Patents, trademarks, etc.)Buy/SellProperty, plant & equipmentPurchase/SellLong-Term InvestmentsInvesting Activities12-9Cash transactions concerned with internal and external financing of the businessIssue/Retire BondsBorrow $/Repay LoansSell/Repurchase SharesIssue DividendsPaycheckforDateDept. of TreasurerJaneDoeFinancing Activities12-10Categorizing Cash Flow ActivitiesCurrent AssetsandCurrent LiabilitiesIncomeStatementTransactionsOperating ActivitiesLong-Term Liabilitiesor ShareholdersEquityFinancing ActivitiesLong-Term AssetsInvesting Activities12-11Methods to ReportCash from Operating ActivitiesDirect Method Indirect Methodboth methods arrive at same cash from operating activitiesreports major classes of cash receipts and paymentsadjusts net income to remove effect of accruals12-12Preparing the Statement of CashFlows A Worksheet MethodStep 1 - List all activitiesOperating activities based on income statementInvesting and financing activities based on additional information12-13Preparing the Statement of CashFlows A Worksheet MethodStep 2 - List the accrual amount in the Income StatementOperating activities are reported in...
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C1 Chapter 12 - 12-1Chapter 12The Statement of Cash...

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