201Lec12 - 201Lec12.PPT STATEMENT OF CASH FLOWS 4th...

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STATEMENT OF CASH FLOWS STATEMENT OF CASH FLOWS 4th REQUIRED GAAP Statement. Covers a period of time ( like an income statement ). Focuses on: Inflows of CASH Outflows of CASH 201Lec12.PPT 1
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Questions the Statement of Cash Questions the Statement of Cash Flow Answers: Flow Answers: 2
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4 Parts of Statement of Cash Flows 4 Parts of Statement of Cash Flows 4 Parts of Statement of Cash Flows 4 Parts of Statement of Cash Flows Inc o m e   S ta te m e nt Ite m s Use Direct or Indirect  method. 1.Operating Activities Generally Long- Term Asset Items 2.Investing   Activities Generally Long-    Equity Items 3.Financing   Activities 3
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Examples: 1. Is s ua nc e  o f c o m m o n  s to c k to  purc ha s e  a s s e ts . 2. C o nve rs io n o f b o nds  into   c o m m o n s to c k. 3. Is s ua nc e  o f de b t to   purc ha s e  a s s e ts . 4. Exc ha ng e s  o f pla nt  a s s e ts . GAAP Rule : Companies report  these activities in either a  separate schedule  at the  bottom of the statement of cash  flows or in the  footnotes  to the  financial statements. 4.Significant Noncash Activities 4
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Net Income Per income stmt (Accrual basis) xxx   + or -    Adjustments (Convert to cash basis)    xxx Net Cash from Operations xxx Called INDIRECT METHOD Cash receipts from customers xxx less Cash payments: suppliers xxx     operating expenses xxx     taxes, interest xxx     -xxx Net Cash from Operations xxx Called DIRECT METHOD S A M E A M O U N T FORMAT FORMAT - 3 main parts plus schedule - 3 main parts plus schedule FORMAT FORMAT - 3 main parts plus schedule - 3 main parts plus schedule 5
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2 - Cash from INVESTING activities: xxx Buy or sell OTHER company’s stock. xxx Lend Money, Receive repayments. xxx xxx 3 - Cash from FINANCING activities: Borrow money, pay back debt. xxx Buy or sell your OWN stock. xxx Pay dividends. xxx xxx NET INCREASE (DECREASE) IN CASH XXX Cash at Beginning of Year  (On balance sheet) XXX Cash at End of Year           (On balance sheet)  XXX DON’T FORGET SIGNIFICANT NON-CASH SCHEDULE DON’T FORGET SIGNIFICANT NON-CASH SCHEDULE 6
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EXAMPLES : Operating activities adjustments. - Accrual to Cash conversion. Assume: Sales (all on credit) $100,000 Expenses $60,000 Net Income $40,000 and a) Beginning A/R = $10,000. Ending A/R = $10,000. Cash Collected from sales? 7 Accounts Receivable 1/1/012 Balance 10,000 dr A/R cr Sales 100,000 Cash Receipts from customers dr cash cr A/R 100,000 12/31/12 Balance 10,000
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EXAMPLES : Operating activities adjustments. - Accrual to Cash conversion. Assume:
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201Lec12 - 201Lec12.PPT STATEMENT OF CASH FLOWS 4th...

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