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The Statement of Cash Flows

ACCOUNTING CONCEPTS. CH 1: ACCT

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The Statement of Cash Flows

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    1. The Statement of Cash Flows Chapter 17

    2. ACCOUNTING CONCEPTS CH 1: ACCT & THE BUS ENVIRONMENT CH 2: RECORDING TRANSACTIONS CH 3: MEASURING INCOME; ADJUSTMENTS CH 4: COMPLETING THE ACCTING CYCLE CH 5: MERCHANDISE OPERATIONS CH 6: MERCHANDISE INVENTORY CH 7: SPECIAL JOURNALS CH 8: CONTROLLING CASH CH 9: RECEIVABLES CH 10: PLANT ASSETS & INTANGIBLES CH 11: CURRENT LIABILTIES & PAYROLL CH 17: CASH FLOW

    3. LEARNING OBJECTIVES AFTER COMPLETING THIS LESSON, THE STUDENT SHOULD BE ABLE TO: 1. Identify purposes of the statement of cash flows. 2. Distinguish among operating, investing, and financing cash flows. 3. Prepare a of cash flow statement by direct method in the proper format

    6. show the relationship of net income to changes in the firm’s cash

    7. Cash Includes... cash on hand. cash in the bank. cash equivalents.

    8. Operating Activities

    9. Investing Activities

    10. Financing Activities

    11. WHEN: PERIOD OF TIME B. OPERATING ACTIVITIES

    12. 1. BEGINNING CASH BALANCE

    13. D. WHAT DOES NOT GO ON THE CASH FLOW STATEMENT 1. ASSETS 2. LIABLITIES 3. INCREASES/DECREASES IN LIABILITIES 4. DEPRECIATION 5. INVENTORY INCREASES/ DECREASES 6. PERSONAL RECEIPTS 7. PERSONAL EXPENSES

    14. Format of the Statement of Cash Flows FASB has approved two methods for reporting cash flows from operating activities.

    19. SUMMARY A. THE CASH FLOW STATEMENT SUMMARIZES THE FLOW OF CASH IN & OUT OF THE BUSINESS. B.CASH FLOW TRANSACTIONS CAN BE CLASSIFIED AS OPERATING, INVESTING, & FINANCING

    20. Exercise 17-8 Pg 686

    21. CASH FLOW SELF TEST

    23. The Indirect Method

    24. The Indirect Method

    25. The Indirect Method

    26. The Indirect Method

    27. Cash Flows from Investing Activities Acquisition and Sales of Plant Assets The business had plant assets net of depreciation of $219,000 at the beginning of the year and $453,000 at year end. Further, the acquisition of plant assets amounted to $306,000 during the year.

    28. Acquisition and Sales of Plant Assets The income statement shows depreciation expense of $18,000 and a $8,000 gain on sale of plant assets. What is the book value of the assets sold? Beginning net balance + Acquisitions – Depreciation – Book value of assets sold = Ending balance

    29. Acquisition and Sales of Plant Assets $219,000 + $306,000 – $18,000 – x = $453,000 x = $219,000 + $306,000 – $18,000 – $453,000 x = $54,000 (book value) How much are the proceeds from the sale of plant assets?

    30. Acquisition and Sales of Plant Assets Book value + Gain or – Loss = Proceeds $54,000 + $8,000 = $62,000 How do we determine acquisitions? Beginning net balance + Acquisitions – Depreciation – Book value of assets sold = Ending balance

    31. Computing the Cash Amounts of Financing Activities Financing activities affect liability and stockholders’ equity accounts. Notes Payable Bonds Payable Long-Term Debt Common Stock Paid-in Capital Retained Earnings

    32. Issuance and Payments of Long-Term Notes Payable Beginning balance was $77,000. New debt amounting to $94,000 was incurred during the year. The ending balance for the Long-Term Notes Payable account was $160,000. How much was the payment? $11,000

    33. Computing Dividend Payments Dividend payments are computed by analyzing the Dividends Payable account. Beginning balance + Dividends declared – Dividend payments = Ending balance

    34. Noncash Investing and Financing Activities... are not reported in the statement of cash flows. The FASB requires that significant non-cash investing and financing activities be shown in a separate schedule at the bottom of the statement.

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