Kế toán, kiểm toán - Chapter 16: Reporting the statement of cash flows

How does a company obtain its cash?

Where does a company spend its cash?

What explains the change in the cash balance?


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REPORTING THE STATEMENT OF CASH FLOWSChapter 16How does a company obtain its cash?Where does a company spend its cash?What explains the change in the cash balance?PURPOSE OF THE STATEMENT OF CASH FLOWSHow did the business fund its operations?Did the business borrow any funds or repay any loans?Does the business have sufficient cash to pay its debts as they mature?Did the business make any dividend payments?IMPORTANCE OF CASH FLOWSCashCurrencyCash EquivalentsShort-term, highly liquid investments.Readily convertible into cash.Sufficiently close to maturity so that market value is unaffected by interest rate changes.MEASUREMENT OF CASH FLOWSCLASSIFICATION OF CASH FLOWS The Statement of Cash Flows includes the following three sections:Operating ActivitiesInvesting ActivitiesFinancing ActivitiesC1OutflowsSalaries and wagesPayments to suppliersTaxes and finesInterest paid to lendersOtherInflowsReceipts from customersCash dividends receivedInterest from borrowersOtherOPERATING ACTIVITIESC1OutflowsPurchasing long-term productive assetsPurchasing equity investmentsPurchasing debt investmentsOtherInflowsSelling long-term productive assetsSelling equity investmentsCollecting principal on loansOtherINVESTING ACTIVITIESC1OutflowsPay dividendsPurchasing treasury stockRepaying cash loansPaying owners’ withdrawalsInflowsIssuing its own equity securitiesIssuing bonds and notesIssuing short- and long-term liabilitiesContributions by ownersFINANCING ACTIVITIESC1NONCASH INVESTING AND FINANCING Items requiring separate disclosure include:Retirement of debt by issuing equity securities.Conversion of preferred stock to common stock.Leasing of assets in a capital lease transaction.C1FORMAT OF THE STATEMENT OF CASH FLOWSPREPARING THE STATEMENT OF CASH FLOWSP1ANALYZING THE CASH ACCOUNTP1The Cash account is a natural place to look for information about cash flows from operating, investing, and financing activities. ANALYZING THE CASH ACCOUNTP1Cash from OperatingCash from InvestingCash from FinancingCash ProvidedANALYZING NONCASH ACCOUNTP1A second approach to preparing the statement of cash flows is analyzing noncash accounts. INFORMATION TO PREPARE THE STATEMENTP1Comparative Balance SheetsCurrent Income StatementAdditional InformationInformation to prepare the statement of cash flows usually comes from three sources: CASH FLOWS FROM OPERATING INDIRECT AND DIRECT METHODS OF REPORTINGThe net cash amount provided by operating activities is identical under both the direct and indirect methods.Direct MethodIndirect MethodAPPENDIX 16B: DIRECT METHOD OF REPORTING OPERATING CASH FLOWSP5Adjust income statement accounts related to operating activities for changes in their related balance sheet accounts:Framework for reporting cash receipts and cash payments APPENDIX 16B: DIRECT METHOD OF REPORTING OPERATING CASH FLOWSP5END OF CHAPTER 16

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