Statement_of_Cash_Flows[1] Flashcards
(30 cards)
What items are included in operating activities on the Statement of Cash Flows?
Cash received from Customers- Interest & Dividends- Trading Securities
Cash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities
What items are included in investing activities on a Statement of Cash Flows?
Cash received: Sale of PP&E- Sale of Investments- Loan Principle
Cash paid: Loans- Acquisitions- AFS or HTM Securities- Taxes- Trading Securities
What items are included in Financing Activities in a Statement of Cash Flows?
Cash received: Issuance of Stock- Issuance of Debt
Cash paid: Dividends
What is the direct method for a Statement of Cash Flows?
Starts with Income from Continuing Operations
Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses
If used- the Indirect Method must also be shown
What is the Indirect Method for a Statement of Cash Flows?
Starts with Net Income
Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses
What is the cash flow category for interest paid and received?
Operating Activities.
What is the direct method on the statement of cash flows?
This method presents actual inflows and outflows from cash operations. Must also disclose the indirect method (reconciliation of net income to cash flows from operations) as a supporting schedule.
What is the indirect method on the statement of cash flows?
Reconciles net income to cash flows from operating activities.
What is the cash flow category for collections of principal amounts on loans made to other entities?
The category is Investing.
Name the four major sections in the direct method cash flow statement.
Operating cash flows;
Investing cash flows;
Financing cash flows.
Reconciliation of net income and net operating cash flows.
List the required categories for the Statement of Cash Flows.
Net cash inflow or outflow from Operating Activities;
Net cash inflow or outflow from Investing Activities;
Net cash inflow or outflow from Financing Activities;
Effects of Foreign Currency Translation;
Reconciliation of net cash inflows/outflows with the reported change in cash and cash equivalents on the Balance Sheet;
Non-cash Investing and Financing Activities.
What is the reporting basis of the statement of cash flows?
The reporting basis is cash and cash equivalents.
What is reported on the Statement of Cash Flows?
Information about the cash receipts and cash payments for an entity;
The difference between net income and net operating cash flows;
Information about investing and financing activities which do not involve cash inflows or outflows.
When is a Statement of Cash Flows required?
For all business enterprises that report both financial position (Balance Sheet) and results of operations (Income Statement) for a period.
What is the basic purpose of the statement of cash flows?
The basic purpose is to provide information about the cash receipts and cash payments for an entity to help investors, creditors, and others.
What are some examples of cash inflows classified as Investing Activities?
Sale of long-term assets;
Collection of loan principal;
Disposal of held to maturity (HTM) and available for sale (AFS) debt and equity securities;
Sale of productive assets (not inventory).
What are some examples of cash outflows classified as Investing Activities?
Purchase of long-term assets;
Lending to others;
Investment in debt and equity securities held to maturity and available for sale);
Purchase of productive assets (not inventory).
What are some examples of cash outflows classified as Financing Activities?
Repurchase of own stock;
Paying back lenders (principal only);
Payment of dividends.
What is the cash flow category for purchases of trading securities?
The category is Operating.
What is the cash flow category for purchases of securities available for sale?
The category is Investing.
What is the cash flow category for dividends paid?
The category is Financing.
What is the cash flow category for principal payments on short-term and long-term loans from financial institutions made to acquire inventory for resale?
The category is Financing.
What is the cash flow category for loans made to other entities?
The category is Investing.
What is the cash flow category for principal payments on short-term and long-term loans (from financial institutions or dealers) made to acquire plant assets?
The category is Financing.
