finance_mngmt_chap3

finance_mngmt_chap3 - Chapter 3: Working With Financial...

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Chapter 3: Working With Financial Statements 3.1 Cash Flow and Financial Statements: A Closer Look Sources and Uses of Cash : Sources Cash inflow – occurs when we “sell” something Decrease in asset account (Sample B/S) Accounts receivable, inventory, and net fixed assets Increase in liability or equity account Accounts payable, other current liabilities, and common stock Uses Cash outflow – occurs when we “buy” something Increase in asset account Cash and other current assets Decrease in liability or equity account Notes payable and long-term debt Statement of Cash Flows : Statement that summarizes the sources and uses of cash Changes divided into three major categories Operating Activity – includes net income and changes in most current accounts Investment Activity – includes changes in fixed assets Financing Activity – includes changes in notes payable, long-term debt, and equity accounts, as well as dividends
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finance_mngmt_chap3 - Chapter 3: Working With Financial...

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