o Tangible used in operations
o Actively used in operations
o Expected to benefit future periods
o Called property, plant, & equipment
o Compute cost
o All expenditures needed to prepare asset for its intended used
Statement of Cash Flows
For Year Ended December 31, 2013
Cash flows from operating activities:
Adjustments to reconcile net income to net
cash provided by operating activities
Increase in a
December 31, 2013:
December 31, 2012:
December 31, 2014:
Common-Size Comparative Inco
Partnerships form of organization
o Voluntary association
o Partnership agreement
o Limited life
o Unlimited liability
o Co-ownership of property
o Mutual agency
Different types of partnerships
o Limited partnerships (LP)
Ch 13 Notes
Characteristics of a corporation
Limited liability for stockholders
Transferable ownership rights
Lack of mutual agency for stockholders
Ease of capital accumulation
Long Term Debt
Company is obligated to repay the principal amount, even
during bad times
Lender does not share in the success of the company
Company in not obligated to repay the principal amount
(investors can lose all of their invest
CH 15 notes Investments
Motivation for investment
o Earn money of extra cash
o Influence another companys operating decisions
o To gain assets or research another company has done
Both stocks and bonds we invest as a company
o Debt securitie
Ch. 17 Ratio Analysis
o Liquidity and efficiency
How well can a company pay its short term debts
How well it manages?
Successful? Continue into future
Paying off long term liabilities
1. If a partnership contract does not state the period of time the partnership is
to exist, when does the partnership end?
Death, bankruptcy, or any event taking away the ability of a partner to
enter into or fulfill a contract ends a partnership.
1. what characteristics of a plant asset make it different from other assets?
Tangible used in operations
Actively used in operations
Expected to benefit future periods
Life longer then a year
2. what is the general rule for cost inclusion for pla
1. Whats the difference between notes payable and bonds payable?
A note payable is not affected by the growth or revenue accumulated by the
company. Its a set amount of money, a bond can accumulate interest.
2. What is the main difference between a bond a
Statement of cash flows
o Importance of cash flows
How was the business funded?
Did the business make dividend payments?
Does it have enough cash?
Did it take out loans?
o Measurement of cash flows
Cash equivalents are
Short-term, highly liquid inv
CH 15 Questions
1. Under what two conditions should investments be classified as current
(1) Management intends to convert to cash within one year or the
operating cycle, (2) are readily convertible to cash
2. On a balance sheet, what valuation mu
1. What is the reporting purpose of the statement of cash flows? Identify at least
two questions that this statement can answer.
The purpose of the statement of cash flows in the report cash flows and cash
payments during a period.
How was the business fu
2. what is the difference between comparative financial statements and commonsize comparatives statements?
Comparative financial statements facilitate comparison by showing financial
amounts in side by side columns on a single statement.
Common size compa
Fill in yellow sections
Straight Line Depreciation
Units of Production
Depreciation per unit
Depreciation per unit
1. Statement of Cash flows
i. Purpose to report cash receipts (inflows) and cash
payments (outflows) during a period
b. What can it be used for?
i. Answers :
1. How does a company obtain its cash?
2. Where does a company spend its cash?