UCB+UGBA102A+Topic09+Slides

UCB+UGBA102A+Topic09+Slides - Statement of Cash Flows...

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Statement of Cash Flows UGBA102A Introduction to Financial Accounting
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UGBA102A Dennis Geyer 2 Cash Reports There are two ways of preparing cash reports: Cash Receipts & Disbursements Statement reports the increases and decreases of cash as they affect the Cash Account. It takes an intrinsic view of cash flow. Statement of Cash Flows reports the inflows and outflows of cash as measured by their effects on other accounts. It takes an extrinsic view of cash flow.
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UGBA102A Dennis Geyer 3 Comparison of Cash Reports If Cash + Other Assets = Liabilities + O Equity Then Cash = Liabilities + O Equity - Other Assets Cash = Cash Increases – Cash Decreases Statement of Cash Receipts & Disbursements Statement of Cash Flows
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UGBA102A Dennis Geyer 4 Uses of Statement of Cash Flows 1. reports on the inflows and outflows of cash and cash equivalents of an entity during an accounting period. 2. provides information about an enterprise’s ability to generate positive cash flow. 3. provides information about the sources and uses of cash and cash equivalents other than from operating activities.
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UGBA102A Dennis Geyer 5 Basic Format Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities Net Increase (Decrease) In Cash & Equivalents Supplemental Disclosures
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UGBA102A Dennis Geyer 6 Patterns of Funds Flow Funds Assets Equities Operations External sources of equity & debt financing Investments in tangible & intangible infrastructure Conversion of assets into value for customers
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UGBA102A Dennis Geyer 7 Operating Activities Cash inflows from: Cash inflows from: Cash outflows for: Cash outflows for: Sale of goods & services Purchase of merchandise inventory Interest received Salaries & wages paid Dividends received Interest paid Sale of trading securities Purchase of trading securities Other items not related to investing & financing (e.g. insurance settlements) Other items not related to investing & financing (e.g. contributions to charity)
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UGBA102A Dennis Geyer 8 Investing Activities Cash inflows from: Cash inflows from: Cash outflows for: Cash outflows for: Sale of property, plant & equipment Purchase of property, plant & equipment Sale of available-for-sale & held- to-maturity securities Purchase of available-for-sale & held-to-maturity securities Collection of loans from others Making of loans to others
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UGBA102A Dennis Geyer 9 Financing Activities Cash inflows from: Cash inflows from: Cash outflows for: Cash outflows for: Issuing of capital stock Purchase of treasury stock Issuing of long-term debt (bonds, mortgages, & notes) Payment of debt (principal only) Other short-term & long-term borrowing of cash Payment of cash dividends
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