Bài giảng Fundamental Financial Accounting Concepts - Chapter 12: Statement of Cash Flows

Statement of Cash FlowsChapter TwelveMcGraw-Hill/IrwinMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Reporting Format for the Statement of Cash FlowsOperating ActivitiesInvesting ActivitiesFinancing ActivitiesThe statement of cash flows must include the following three sections:12-*Cash Flows from Operating ActivitiesCash Flows from Operating ActivitiesInflows (Receipts)Receipts from salesCommissions and feesInterest and dividends receivedOutflows (Payments)Payments for inventorySalaries and wagesOperating expensesInterest on liabilitiesTaxes12-*Cash Flows from Investing ActivitiesCash Flows from InvestingActivitiesInflows (Receipts)Selling property, plant, and equipmentSelling investment securitiesCollecting loansOutflows (Payments) Purchasing property, plant, and equipmentPurchasing investment securitiesLending to others12-*Cash Flows from Financing ActivitiesCash Flows from Financing ActivitiesInflows (Receipts)BorrowingIssuing stockOutflows (Payments)Repaying debt (excluding interest)Purchasing treasury stockPaying dividends12-*Cash flows from operating activities can be prepared using either the direct method or the indirect method.Cash Flow: Operating Activities12-*Net IncomeCash Flows from Operating ActivitiesOperating Activities: Indirect MethodChanges in current assets and current liabilities as shown on the following table.+ Losses and - Gains+ Noncash expenses such as depreciation and amortization.12-*Indirect Method – The Reconciliation ApproachThis method examines the relationships between items reported on the income statement and the related assets and liabilities.IncomeStatementBalanceSheet12-*Cash Flows from Operating Activities – Indirect Approach12-*Indirect Method: Rules Approach12-*Indirect Method: Rules Approach12-*Operating Activities: Direct MethodThe operating activities section of the statement of cash flows can also be shown under the direct approach.Shows specific sources and uses of cash associated with operating activities.Only the operating activities section is affected by the difference.12-*Operating Activities: Compare MethodsThe direct method is easy to understand and is recommended by the FASB.However, most companies use the indirect method since they use accrual accounting systems and it’s easier and less expensive for them to prepare.12-*Investing Activities12-*Financing ActivitiesThe financing activities section of the statement of cash flows shows changes in three areas.DebtCapital AccountsRetained EarningsNotes or BondsStock or Treasury StockDividends12-*Financing Activities12-*The Completed Statement: Indirect Method12-*The Completed Statement: Direct Method12-*End of Chapter Twelve12-*