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Unformatted text preview: spent section of the direct cash ﬂow table) minus sale of assets (from the cash received
section). 5. “Long-term Assets” are the depreciable assets, such as plant and equipment, vehicles, etc. This
month’s balance is equal to last month’s balance plus new assets purchased, minus sale of assets. 6. “Accumulated Depreciation” decreases the value of the capital assets. This month’s balance is
last month’s balance plus new depreciation, from the income statement. 7. “Accounts Payable”will be last month’s balance plus additions (a subset of costs and expenses)
minus payments of payables. New payables will include new inventory not paid for when purchased, plus indirect costs of sales not paid as incurred, operating expenses not paid as incurred,
and similar items. The details are in the Payment Detail table shown on page 16.6. 8. “Current Borrowing”will be equal to last month’s balance plus new borrowing minus principal
payments. Interest payments are not included, because they go into the income statement and
don’t affect the balance. Principal payments and new borrowing should come from the cash
ﬂow. 9. “Other Current Liabilities”are things like accrued taxes and accrued salary; liabilities you know
you have but haven’t paid. These usually don’t cost interest. 10. “Long-term Liabilities” increase when you borrow and decrease with payment of principal.
The balance is going to be last month’s balance plus new borrowing as a source of cash, minus
principal payments as a use of cash. In the sample case, the March balance shows a $100 increase for a new loan, minus a $3 decrease for payment of principal, so that the $376 at the end
of March is exactly $97 more than the $279 at the end of February.
11. “Paid-in Capital” is money invested. The balance should be last month’s balance plus new investment from sources of cash, minus dividends from uses of cash.
12. “Retained Earnings” is the accumulated earnings reinvested in the company, not taken out as
dividends. Normally this changes once a year when the annu...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.
- Winter '09