The Income Statement and Statement of Cash Flows

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "The Income Statement and Statement of Cash Flows"

Transcription

1 THE STATEMENT OF CASH FLOWS Purpose of the Statement of Cash Flows The purpose of the statement of cash flows is to identify the sources and uses of cash and the change in cash from the beginning to the end of the accounting period. The sources (cash receipts) and uses (cash disbursements) are classified into three categories. 1. Operating Activities: Cash receipts from sales and cash disbursements for cost of goods sold and operating expenses that are incurred to generate the sales. For financial accounting purposes operating activities include the receipt of dividends and interest and the payment of interest. 2. Investing Activities: Cash paid for the acquisition of fixed assets and investments and cash received from their disposition. 3. Financing Activities: Cash received from the issuance of debt or equity financing and cash paid for the retirement of financing as well as the payment of dividends. Content and Format of the Statement of Cash Flows The basic format of the statement of cash flows is as follows: Cash flows from operating activities $ Cash flows from investing activities $ Cash flows from financing activitie $ Net increase (decrease in cash for the year) $ Beginning cash balance $ Ending cash balance $ Preparation of the Statement of Cash Flows There are two approaches to preparing the statement of cash flows. In the direct method operating activities are presented as total cash receipts from sales and cash disbursements for cost of sales and other operating activities. In the indirect method operating activities are a reconciliation of net income. In this course we will be using the indirect method. Cash flows from operating activities: Net income $ Add: Noncash charges $ Increases in current liabilities $ Decreases in current assets $ Less: Increases in current assets $ Decreases in current liabilities $ Add: Losses from investing or financing activities $ Less: Gains from investing or financing activities $ $ Net cash provided by (used by) operating activities $ E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 1

2 Use of the Cash Flows Worksheet Using the cash flows worksheet simplifies the process of preparing a statement of cash flows. We will be using a cash flows worksheet to complete the exercises assigned in this lesson. The worksheet starts with a listing of the beginning and ending balances of each account on the balance sheet. We then examine changes in each account and enter those amounts in a multi-column worksheet. For example, had a cash balance of $70,000 at the beginning of 2002 and a cash balance of $100,000 at the end of the year. The change in cash of $30,000 needs to be separated into operating activities, investing activities and financing activities. The work sheet is our starting point to complete this task. Changes in Cash Increase Decrease Cash 100,000 70,000 30,000 Accounts receivable 50,000 60,000 10,000 Investments 30,000 60,000 30,000 Equipment 300, ,000 50,000 Less: Accumulated depreciation (110,000) (90,000) 20,000 Current liabilities (50,000) (60,000) 10,000 Capital stock (160,000) (160,000) Retained earnings (160,000) (130,000) 30, ,000 60,000 In analyzing the changes in cash we can see from the work sheet the increases in current assets result in decreases in cash. If we make sales on credit the amounts are included in net income but are not reflected in the cash account. Likewise when we pay down our current liabilities this uses cash which is not reflected in the net income amount. Once we have reconciled the increases and decreases in cash as a result of changes in the account balances we are ready to examine the income statement. In this case the company had net income of $60,000. Also included in the income statement was a loss on the sale of investments. The change in the investments account reflects the original cost of the investment that was sold. In analyzing the accounts we also discover that dividends were declared and paid in the amount of $30,000 during the E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 2

3 year. With this information on hand we can now extend the work sheet. The following shows the extensions to the Operating Activities columns (items shaded in green). Changes in Cash Operating Increase Decrease Increase Decrease Cash 30,000 Accounts receivable 10,000 10,000 Investments 30,000 Equipment 50,000 Less: Accumulated depreciation 20,000 20,000 Current liabilities 10,000 10,000 Capital stock Retained earnings 30,000 90,000 60,000 Analysis of retained earnings: Net income 60,000 Dividends paid Loss on sale of investments 10, ,000 10,000 Changes in cash flow 30,000 90,000 10,000 10,000 The extension to operating activities includes the extension of changes in current assets and current liabilities as well as non-cash charges to net income such as depreciation expense. We were not given any information regarding the disposition of fixed assets with accumulated depreciation so therefore the change in accumulated depreciation is the depreciation expense charged to net income for the year. Rather than analyzing the changes in the retained earnings account on a single line we have expanded the analysis in the section below the balance sheet accounts (items shaded in pink). We start with net income which is the starting point for the operating activities and add back the loss on sale of investments. The amount is included in net income on the income statement but belongs in the investing activities section of the cash flow statement. We can think of this as just a transfer from one section to another. E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 3

4 After extending all of the information to the operating activities portion of the work sheet we foot the columns and calculate a cash inflow of $100,000 and a cash outflow of $10,000 to give us a net cash inflow for the year of $90,000 (items shaded in yellow). This information will be transcribed to the statement of cash flows. We repeat the process for the investing activities section of the cash flow statement (items shaded in blue). The following is the extension for. Changes in Cash Investing Increase Decrease Increase Decrease Cash 30,000 Accounts receivable 10,000 Investments 30,000 30,000 Equipment 50,000 50,000 Less: Accumulated depreciation 20,000 Current liabilities 10,000 Capital stock Retained earnings 30,000 90,000 60,000 Analysis of retained earnings: Net income Dividends paid Loss on sale of investments 10,000 30,000 60,000 Changes in cash flow 30,000 30,000 30,000 30,000 The disposition of the investment resulted in a loss. If we combine this loss with the original basis in the investment we will be able to derive the cash received from the disposition of the investment. In this case we received $20,000 in cash from the sale of the investment. Selling price $20,000 Original cost 30,000 Loss on disposition $10,000 E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 4

5 The other transaction that will be reported in the cash flow statement is the purchase of equipment in the amount of $50,000. By footing the columns of the investing activities we see that there was $30,000 in cash outflow for the accounting period. Once the amounts are extended to the financing columns of the work sheet we can conduct an analysis of cash flow from financing activities (items shaded in orange). The following is an excerpt from the original work sheet for. Changes in Cash Financing Increase Decrease Increase Decrease Cash 30,000 Accounts receivable 10,000 Investments 30,000 Equipment 50,000 Less: Accumulated depreciation 20,000 Current liabilities 10,000 Capital stock Retained earnings 30,000 90,000 60,000 Analysis of retained earnings: Net income Dividends paid 30,000 Loss on sale of investments - 30,000 Changes in cash flow 30,000 30, In this example the only financing activity is the declaration and payment of dividends. Therefore the cash outflow from financing activities was $30,000 for the year. Using Excel a cash flow statement can be prepared by linking the items on the cash flow work sheet to a separate page where the cash flow statement is formatted. The following is the completed cash flow statement for. E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 5

6 Statement of Cash Flows Cash flows from operating activties Net income $60,000 Adjustments to reconcile net income to net cash provided by operating activities Depreciation $20,000 Decrease in accounts receivable 10,000 Decrease in accrued liabilities (10,000) Loss on sale of investments 10,000 30,000 Net cash provided by operating activities 90,000 Cash flows from investing activities Sale of investments 20,000 Purchase of equipment (50,000) Net cash used in investing activities (30,000) Cash flows from financing activities Dividends paid (30,000) Net cash used in financing activities (30,000) Net increase increase in cash 30,000 Cash at beginning of year 70,000 Cash at end of year $100,000 Noncash Investing and Financing Activities A separate disclosure is made at the bottom of the cash flow statement identifying any significant investing or financing activities that were executed without any cash changing hands. We will explore how this is handled on the cash flow work sheet and as well as the disclosure in the statement when we reexamine this subject in Chapter 22. E:\Teaching\3321\web\module2\c4\tnotes\c4b.doc 1/31/2007 6

Statement of Cash Flows

Statement of Cash Flows PREPARING THE STATEMENT OF CASH FLOWS: THE INDIRECT METHOD OF REPORTING CASH FLOWS FROM OPERATING ACTIVITIES The work sheet method described in the text book is not the recommended approach. We will provide

More information

COMPONENTS OF THE STATEMENT OF CASH FLOWS

COMPONENTS OF THE STATEMENT OF CASH FLOWS ILLUSTRATION 24-1 OPERATING, INVESTING, AND FINANCING ACTIVITIES COMPONENTS OF THE STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES + Sales and Service Revenue Received Cost of Sales Paid Selling

More information

Statement of Cash Flows

Statement of Cash Flows THE CONTENT AND VALUE OF THE STATEMENT OF CASH FLOWS The cash flow statement reconciles beginning and ending cash by presenting the cash receipts and cash disbursements of an enterprise for an accounting

More information

Chapter 6 Statement of Cash Flows

Chapter 6 Statement of Cash Flows Chapter 6 Statement of Cash Flows The Statement of Cash Flows describes the cash inflows and outflows for the firm based upon three categories of activities. Operating Activities: Generally include transactions

More information

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS

CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS C H 2 3, P a g e 1 CH 23 STATEMENT OF CASH FLOWS SELF-STUDY QUESTIONS (note from Dr. N: I have deleted questions for you to omit, but did not renumber the remaining questions) 1. The primary purpose of

More information

Section A: Questions On Fill In The Blanks

Section A: Questions On Fill In The Blanks Section A : 26 FILL IN THE BLANK Section B : 10 TRUE OR FALSE QUESTIONS Section C : 11 Multiple Choice Questions Section A: Questions Fill In The Blanks the right column please insert the items from which

More information

CHAPTER 23. Statement of Cash Flows 1, 2, 7, 8, 12 3, 4, 5, 6, 16, 17, 19 9, 20 4, 5, 9, 10, 11 10, 13, 15, 16. 7. Worksheet adjustments.

CHAPTER 23. Statement of Cash Flows 1, 2, 7, 8, 12 3, 4, 5, 6, 16, 17, 19 9, 20 4, 5, 9, 10, 11 10, 13, 15, 16. 7. Worksheet adjustments. CHAPTER 23 Statement of Cash Flows ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Format, objectives purpose, and source of statement.

More information

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL)

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Page 1 ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Complete these sample exam problems/objective questions and check your answers with the solutions at the end of the review file and identify where

More information

Review of the Accounting Process THE BASIC MODEL

Review of the Accounting Process THE BASIC MODEL THE BASIC MODEL The accounting information system is designed to collect and organize data into information that is useful for stakeholders. The Accounting Equation The basic accounting equation is what

More information

Vol. 1, Chapter 7 The Statement of Cash Flows

Vol. 1, Chapter 7 The Statement of Cash Flows Vol. 1, Chapter 7 The Statement of Cash Flows Problem 1: Solution Transaction # Identification 1 Operating 2 Investing 3 Noncash transaction 4 Financing 5 Noncash transaction 6 Operating 7 Investing 8

More information

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall. Chapter 14 1 Identify the purposes of the statement of cash flows Distinguish among operating, investing, and financing cash flows Prepare the statement of cash flows by the indirect method Identify noncash

More information

The Statement of Cash Flows

The Statement of Cash Flows CHAPTER The Statement of Cash Flows OBJECTIVES After careful study of this chapter, you will be able to: 1. Define operating, investing, and financing activities. 2. Know the categories of inflows and

More information

Consolidated Balance Sheets

Consolidated Balance Sheets Consolidated Balance Sheets March 31 2015 2014 2015 Assets: Current assets Cash and cash equivalents 726,888 604,571 $ 6,057,400 Marketable securities 19,033 16,635 158,608 Notes and accounts receivable:

More information

T-Account Approach to Preparing a Statement of Cash Flows Indirect Method

T-Account Approach to Preparing a Statement of Cash Flows Indirect Method 266 Part 1 E M Foundations of Financial Accounting With these adjustments to the income statement, we can now present the operating activities section of the statement of cash flows using either the direct

More information

Chapter 21 The Statement of Cash Flows Revisited

Chapter 21 The Statement of Cash Flows Revisited Chapter 21 The Statement of Cash Flows Revisited AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments,

More information

> DO IT! Chapter 13. Classification of Cash Flows. Cash from Operating Activities D-1. Solution. Action Plan

> DO IT! Chapter 13. Classification of Cash Flows. Cash from Operating Activities D-1. Solution. Action Plan Chapter 13 > DO IT! Classification of Cash Flows Identify the three types of activities used to report all cash inflows and outflows. Report as operating activities the cash effects of transactions that

More information

how to prepare a cash flow statement

how to prepare a cash flow statement business builder 4 how to prepare a cash flow statement zions business resource center zions business resource center 2 how to prepare a cash flow statement A cash flow statement is important to your business

More information

MASTER BUDGET - EXAMPLE

MASTER BUDGET - EXAMPLE MASTER BUDGET - EXAMPLE Sales IN UNITS for the previous two months (of last quarter), as well as the sales forecast for next quarter are as follows: Sales Budget Units May sales (ACTUAL) 20 June sales

More information

CASH FLOW STATEMENT (AND FINANCIAL STATEMENT)

CASH FLOW STATEMENT (AND FINANCIAL STATEMENT) CASH FLOW STATEMENT (AND FINANCIAL STATEMENT) - At the most fundamental level, firms do two different things: (i) They generate cash (ii) They spend it. Cash is generated by selling a product, an asset

More information

EXERCISES. The cash from operating activities detail is provided as follows for class discussion:

EXERCISES. The cash from operating activities detail is provided as follows for class discussion: EXERCISES Ex. 14 1 There were net additions, such as depreciation and amortization of intangible assets of $389 million, to the net loss reported on the income statement to convert the net loss from the

More information

b. To summarize the operating, investing, and financing activities of the business.

b. To summarize the operating, investing, and financing activities of the business. Chapter 24 Statement of Cash Flows LECTURE OUTLINE The material in this chapter can be covered in three class sessions. Students often have difficulty in adjusting transactions recorded on an accrual basis

More information

Statement of Cash Flows. Study Objectives

Statement of Cash Flows. Study Objectives Statement of Cash Flows Study Objectives Indicate the primary purpose of the statement of cash flows. Distinguish among operating, investing, and financing activities. Explain the impact of the product

More information

Course pack Accounting 202 Chapter 13: Cash Flow Statement

Course pack Accounting 202 Chapter 13: Cash Flow Statement Course pack Accounting 202 Chapter 13: Cash Flow Statement Value Chapter Included 13 Purpose of Cash Flow Understand Operating, Investing, Financing activities Prepare a Cash Flow Statement indirect only

More information

Consolidated Interim Earnings Report

Consolidated Interim Earnings Report Consolidated Interim Earnings Report For the Six Months Ended 30th September, 2003 23th Octorber, 2003 Hitachi Capital Corporation These financial statements were prepared for the interim earnings release

More information

2-8. Identify whether each of the following items increases or decreases cash flow:

2-8. Identify whether each of the following items increases or decreases cash flow: Problems 2-8. Identify whether each of the following items increases or decreases cash flow: Increase in accounts receivable Increase in notes payable Depreciation expense Increase in investments Decrease

More information

Cash is King. cash flow is less likely to be affected

Cash is King. cash flow is less likely to be affected Reading 27: Understanding Cash Flow Statements Relevance of Cash Flow The primary purpose of the statement of cash flows (SCF) is to provide: Info about a firm s cash receipts & cash payments during an

More information

Reporting and Analyzing Cash Flows QUESTIONS

Reporting and Analyzing Cash Flows QUESTIONS Chapter 12 Reporting and Analyzing Cash Flows QUESTIONS 1. The purpose of the cash flow statement is to report all major cash receipts (inflows) and cash payments (outflows) during a period. It helps users

More information

CASH FLOW STATEMENT. On the statement, cash flows are segregated based on source:

CASH FLOW STATEMENT. On the statement, cash flows are segregated based on source: CASH FLOW STATEMENT On the statement, cash flows are segregated based on source: Operating activities: involve the cash effects of transactions that enter into the determination of net income. Investing

More information

! "#$ %&!& "& ' - 3+4 &*!&-.,,5///2!(.//+ & $!- )!* & % +, -).//0)& 7+00///2 *&&.4 &*!&- 7.00///2 )!*.//+ 8 -!% %& "#$ ) &!&.

! #$ %&!& & ' - 3+4 &*!&-.,,5///2!(.//+ & $!- )!* & % +, -).//0)& 7+00///2 *&&.4 &*!&- 7.00///2 )!*.//+ 8 -!% %& #$ ) &!&. ! "#!""#$%$#$#$"& $'"()*+,$-).,/ 012! "#$ %&!& "& '!(&)!*&%+,-).//0 -#$#3-4' &,'1$1# $!-!(.//0)& +01+///2 *&& - 3+4 &*!&-.,,5///2!(.//+ &!(!-6%(!(.//.$(!(.//0)& 01,///2 //+2% &*!&- 5,0///2 //32%!(.//+

More information

TOPIC LEARNING OBJECTIVE

TOPIC LEARNING OBJECTIVE Topic Mapping 1 Transaction Analysis Understand the effect of various types of transactions on the accounting equation, accounting journal and accounting ledger. Concepts and Skills Accounting Equation

More information

EMC CORPORATION Consolidated Income Statements (in thousands, except per share amounts) Unaudited

EMC CORPORATION Consolidated Income Statements (in thousands, except per share amounts) Unaudited EMC CORPORATION Consolidated Income Statements (in thousands, except per share amounts) March 31, March 31, 2012 2011 Revenues: Product sales $ 3,068,857 $ 2,931,259 Services 2,025,521 1,676,359 5,094,378

More information

1. Operating, Investment and Financial Cash Flows

1. Operating, Investment and Financial Cash Flows 1. Operating, Investment and Financial Cash Flows Solutions Problem 1 During 2005, Myears Oil Co. had gross sales of $1 000,000, cost of goods sold of $400,000, and general and selling expenses of $300,000.

More information

GBA 521 Midterm Review Dr. Markelevich

GBA 521 Midterm Review Dr. Markelevich GBA 521 Midterm Review Dr. Markelevich Multiple Choice (3 points for each question) Identify the letter of the choice that best completes the statement or answers the question. Wynn Corp. Wynn Corp. reported

More information

Cash Flow Statement. Introduction. Introd. Contd. Chapter 4

Cash Flow Statement. Introduction. Introd. Contd. Chapter 4 Cash Flow Statement Chapter 4 Introduction Management and other interested external parties have always recognized the need for a cash flow statement but it was never required until the FASB (Financial

More information

Understanding Cash Flow Statements

Understanding Cash Flow Statements Understanding Cash Flow Statements 2014 Level I Financial Reporting and Analysis IFT Notes for the CFA exam Contents 1. Introduction... 3 2. Components and Format of the Cash Flow Statement... 3 3. The

More information

13:11. Statement of Cash Flows. Chapter. Illustration. Statement of Cash Flows- summary. Overview

13:11. Statement of Cash Flows. Chapter. Illustration. Statement of Cash Flows- summary. Overview Overview Statement of Cash Flows Chapter 23 BECAUSE of the SCF, users of the financial statements get the best of both worlds! SCF bridges the gap created by paper income resulting from applying an accrual

More information

This week its Accounting and Beyond

This week its Accounting and Beyond This week its Accounting and Beyond Monday Morning Session Introduction/Accounting Cycle Afternoon Session Tuesday The Balance Sheet Wednesday The Income Statement The Cash Flow Statement Thursday Tools

More information

Statement of Change in Working Capital & Inflows/Outflows of Working Capital

Statement of Change in Working Capital & Inflows/Outflows of Working Capital HOSP 2110 (Management Acct) Learning Centre Statement of Change in Working Capital & Inflows/Outflows of Working Capital The statement of changes in working capital shows the net change in working capital

More information

Accounting and Reporting Policy FRS 102. Staff Education Note 1 Cash flow statements

Accounting and Reporting Policy FRS 102. Staff Education Note 1 Cash flow statements Staff Education Note 1: Cash flow Statements Accounting and Reporting Policy FRS 102 Staff Education Note 1 Cash flow statements Disclaimer This Education Note has been prepared by FRC staff for the convenience

More information

CASH FLOW STATEMENT. MODULE - 6A Analysis of Financial Statements. Cash Flow Statement. Notes

CASH FLOW STATEMENT. MODULE - 6A Analysis of Financial Statements. Cash Flow Statement. Notes MODULE - 6A Cash Flow Statement 30 CASH FLOW STATEMENT In the previous lesson, you have learnt various types of analysis of financial statements and its tools such as comparative statements, common size

More information

Modeling Readiness Quiz

Modeling Readiness Quiz Modeling Readiness Quiz 1 Dear Students, Modeling Readiness Quiz Prepared by Prof. Dan Gode http://www.dangode.com Modeling is a useful course, but it also a rigorous and demanding elective. In the future,

More information

Study Guide - Final Exam Accounting I

Study Guide - Final Exam Accounting I Study Guide - Final Exam Accounting I True/False Indicate whether the sentence or statement is true or false. 1. Entries in a sales journal affect account balances in both the accounts receivable ledger

More information

ANSWERS TO MULTIPLE CHOICE. 1. c) 2. d) 3. b) 4. a) 5. c) 6. b) 7. c) 8. c) 9. d) 10. a) E11 3.

ANSWERS TO MULTIPLE CHOICE. 1. c) 2. d) 3. b) 4. a) 5. c) 6. b) 7. c) 8. c) 9. d) 10. a) E11 3. 4. Common stock the usual or normal stock of the corporation. It is the voting stock and generally ranks after the preferred stock for dividends and assets distributed upon dissolution. Often it is called

More information

FINANCIAL STATEMENTS OF KDD CENTRAL SECURITIES CLEARING CORPORATION (KDD)

FINANCIAL STATEMENTS OF KDD CENTRAL SECURITIES CLEARING CORPORATION (KDD) FINANCIAL STATEMENTS OF KDD CENTRAL SECURITIES CLEARING CORPORATION (KDD) for the year ended December 31, 2013 (abbreviated) Ljubljana, February 2014 Boris Tomaž Šnuderl President and CEO Davor Pavić Deputy

More information

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS

STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS C H A P T E R 1 0 STATEMENT OF CASH FLOWS AND WORKING CAPITAL ANALYSIS I N T R O D U C T I O N Historically, profit-oriented businesses have used the accrual basis of accounting in which the income statement,

More information

Guide to Financial Statements Study Guide

Guide to Financial Statements Study Guide Guide to Financial Statements Study Guide Overview (Topic 1) Three major financial statements: The Income Statement The Balance Sheet The Cash Flow Statement Objectives: Explain the underlying equation

More information

Midterm Fall 2012 Solution

Midterm Fall 2012 Solution Midterm Fall 2012 Solution Instructions: 1) Answers for the multiple-choice questions must be recorded on the UW answer card. All other questions must be answered in the space provided on the examination

More information

The Basic Framework of Budgeting

The Basic Framework of Budgeting Master Budgeting 1 The Basic Framework of Budgeting A budget is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period. 1. The act of

More information

RECOGNIZING A MINORITY INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS

RECOGNIZING A MINORITY INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS RECOGNIZING A MINORITY INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS L E A R N I N G O B J E C T I V E Adapt the consolidation work sheet procedure to recognize a minority interest. Chapter 11 illustrates

More information

Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises

Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises Financial Reporting & Analysis Chapter 17 Solutions Statement of Cash Flows Exercises Exercises E17-1. Determining cash flows from operations Using the indirect method, cash flow from operations is computed

More information

Statement of Cash Flow

Statement of Cash Flow Management Accounting 337 Statement of Cash Flow Cash is obviously an important asset to all, both individually and in business. A shortage or lack of cash may mean an inability to purchase needed inventory

More information

Introductory Financial Accounting Course Outline

Introductory Financial Accounting Course Outline Aboriginal Financial Officers Association of Alberta Introductory Financial Accounting Course Outline ACCT 210: INTRODUCTORY FINANCIAL ACCOUNTING I... 1 ACCT 240: INTRODUCTORY FINANCIAL ACCOUNTING II...

More information

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of March 31, 2015 in CZK Millions

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of March 31, 2015 in CZK Millions BALANCE SHEET Assets Property, plant and equipment: 31. 03. 2015 31. 12. 2014 Plant in service 345,012 344,246 Less accumulated provision for depreciation (199,841) (196,333) Net plant in service 145,171

More information

CASH FLOW STATEMENT & BALANCE SHEET GUIDE

CASH FLOW STATEMENT & BALANCE SHEET GUIDE CASH FLOW STATEMENT & BALANCE SHEET GUIDE The Agriculture Development Council requires the submission of a cash flow statement and balance sheet that provide annual financial projections for the business

More information

Statement of Cash Flows: Reporting and Analysis

Statement of Cash Flows: Reporting and Analysis Statement of Cash Flows: Reporting and Analysis Statement of Cash Flows: Reporting and Analysis Copyright 2014 by DELTACPE LLC All rights reserved. No part of this course may be reproduced in any form

More information

a. $ 65,000. b. $ 80,000. c. $130,000. d. $145,000.

a. $ 65,000. b. $ 80,000. c. $130,000. d. $145,000. 注 意 1. 本 試 題 卷 共 50 題, 總 分 100 分 第 01-15 題, 每 題 1.75 分, 合 計 26.25 分 ; 第 16-35 題, 每 題 2 分, 合 計 40 分 ; 第 36-50 題, 每 題 2.25 分, 合 計 33.75 答 錯 不 倒 扣 2. 請 將 答 案 按 試 題 題 號, 依 序 填 入 答 案 卡 1.FastForward had cash

More information

HOME PRODUCT CENTER PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2003 AND 2002

HOME PRODUCT CENTER PUBLIC COMPANY LIMITED BALANCE SHEETS AS AT DECEMBER 31, 2003 AND 2002 BALANCE SHEETS AS AT DECEMBER 31, 2003 AND 2002 Assets Note 2003 Baht 2002 Current assets Cash and cash equivalents 2 36,291,871.62 84,051,092.97 Accounts receivable - net 3 121,235,696.40 140,699,262.83

More information

The Statement of Cash Flows Direct Method

The Statement of Cash Flows Direct Method 23 The Statement of Cash Flows Direct Method DEMONSTRATION PROBLEM The financial statements of Bolero Corporation follow. Copyright Houghton Mifflin Company. All rights reserved. 1 Bolero Corporation Income

More information

Accrual Accounting Fundamentals

Accrual Accounting Fundamentals Accrual Accounting Fundamentals A Primer To assist in maintaining the knowledge and skills after training. Outline of program Introduction to Accrual Accounting Terminology - Definitions Key Financial

More information

Technical Note: Understanding the Effects of Cash Flow Category Assignment

Technical Note: Understanding the Effects of Cash Flow Category Assignment Article # 1131 Technical Note: Understanding the Effects of Cash Flow Category Assignment Difficulty Level: Intermediate Level AccountMate User Version(s) Affected: AccountMate 7 for SQL, Express and LAN

More information

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of June 30, 2014 in CZK Millions

ČEZ, a. s. BALANCE SHEET in accordance with IFRS as of June 30, 2014 in CZK Millions BALANCE SHEET Assets Property, plant and equipment: 30. 6. 2014 31. 12. 2013 Plant in service 319 440 319 081 Less accumulated provision for depreciation (188 197) (182 282) Net plant in service 131 243

More information

Financial Statements Tutorial

Financial Statements Tutorial Financial Statement Review: Financial Statements Tutorial There are four major financial statements used to communicate information to external users (creditors, investors, suppliers, etc.) - 1. Balance

More information

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006

MITSUI SUMITOMO INSURANCE COMPANY, LIMITED AND SUBSIDIARIES. CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 CONSOLIDATED BALANCE SHEETS March 31, 2005 and 2006 2005 2006 ASSETS Investments - other than investments in affiliates: Securities available for sale: Fixed maturities, at fair value 3,043,851 3,193,503

More information

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations:

TRANSACTIONS ANALYSIS EXAMPLE. Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: TRANSACTIONS ANALYSIS EXAMPLE Maxwell Partners Medical Diagnostic Services report the following information for 2011, their first year of operations: 1. Billings to clients for services provided: $350,000

More information

UTAH HOUSING CORPORATION

UTAH HOUSING CORPORATION BALANCE SHEET AS OF JUNE 30, 2015 ASSETS AND DEFERRED OUTFLOWS CURRENT ASSETS: Cash and cash equivalents $ 111,380 Investments (partially restricted, Note 3) 349,734 Current maturities of loans receivable

More information

CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS. Lecture Outline

CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS. Lecture Outline CHAPTER 2 REVIEW OF THE ACCOUNTING PROCESS Overview Chapter 1 explained that the primary means of conveying financial information to investors, creditors, and other external users is through financial

More information

MIDTERM EXAMINATION. Afaaq_tariq@yahoo.com. Fall 2009

MIDTERM EXAMINATION. Afaaq_tariq@yahoo.com. Fall 2009 MIDTERM EXAMINATION Afaaq_tariq@yahoo.com Fall 2009 FIN621- Financial Statement Analysis Asslam O Alikum FIN621- Financial Statement Analysis (Session 3) solved by Afaaq n Shani Bhai with reference n numerical

More information

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS

NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS NAS 03 NEPAL ACCOUNTING STANDARDS ON CASH FLOW STATEMENTS CONTENTS Paragraphs OBJECTIVE SCOPE 1-3 BENEFITS OF CASH FLOWS INFORMATION 4-5 DEFINITIONS 6-9 Cash and cash equivalents 7-9 PRESENTATION OF A

More information

Chapter 3 Statements and Ratios. 2012 Pearson Prentice Hall. All rights reserved. 1-1

Chapter 3 Statements and Ratios. 2012 Pearson Prentice Hall. All rights reserved. 1-1 Chapter 3 Statements and Ratios 2012 Pearson Prentice Hall. All rights reserved. 1-1 The Stockholders Report Generally accepted accounting principles (GAAP) are the practice and procedure guidelines used

More information

Practice Review. Stockholders Equity Chapter

Practice Review. Stockholders Equity Chapter Practice Review Stockholders Equity Chapter Use the following information to answer questions 1-3. When Sample Corporation was formed on January 1, the corporate charter provided for 50,000 shares of $20

More information

Cash Flow Analysis. 15.501/516 Accounting Spring 2004. Professor S. Roychowdhury. Sloan School of Management Massachusetts Institute of Technology

Cash Flow Analysis. 15.501/516 Accounting Spring 2004. Professor S. Roychowdhury. Sloan School of Management Massachusetts Institute of Technology Cash Flow Analysis 15.501/516 Accounting Spring 2004 Professor S. Roychowdhury Sloan School of Management Massachusetts Institute of Technology Mar 1/3, 2004 1 About The Exam March 10 th a week from today.

More information

Statement of Cash Flows

Statement of Cash Flows HOSP 2110 (Management Acct) Learning Centre Statement of Cash Flows The Statement of Cash Flows (or cash flow statement) is one of the main financial statements used by investors. It shows the cash generated

More information

BRIEF EXERCISES. CHAPTER 11 Statement of Cash Flows. Determine proper classification (LO1) Determine proper classification (LO1)

BRIEF EXERCISES. CHAPTER 11 Statement of Cash Flows. Determine proper classification (LO1) Determine proper classification (LO1) BRIEF EXERCISES BE11 1 Classify each of the following items as an operating, investing, or financing activity. 1. Dividends paid. 2. Repayment of notes payable. 3. Payment for inventory. 4. Purchase of

More information

BEAVER CREEK COOPERATIVE TELEPHONE COMPANY CONSOLIDATED BALANCE SHEETS

BEAVER CREEK COOPERATIVE TELEPHONE COMPANY CONSOLIDATED BALANCE SHEETS BEAVER CREEK COOPERATIVE TELEPHONE COMPANY CONSOLIDATED BALANCE SHEETS Study Area Code: 532359 Program Year: 201 4 ASSETS DECEMBER 31, CURRENT ASSETS Cash Subscriber accounts receivable, less bad debt

More information

中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試

中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試 中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試 7 月 12 日 14:00~15:30 商 學 群 組 二 年 級 科 目 : 會 計 學 ( 共 七 頁 第 一 頁 ) 可 使 用 計 算 機, 惟 僅 限 不 具 可 程 式 及 多 重 記 憶 者 一 MULTIPLE CHOICE QUESTIONS: (50%) 誠 實 是 我 們 珍 視 的 美 德, 我 們 喜

More information

Financial Statements. Chapter 19 Study Guide

Financial Statements. Chapter 19 Study Guide Financial Statements Chapter 19 Study Guide Financial Statements Discuss the nature of a consolidated financial statement? Understand the relationship between the work sheet and the financial statements.

More information

國 立 體 育 大 學 100 學 年 度 學 士 班 轉 學 考 試 試 題 休 閒 產 業 經 營 學 系 二 年 級 會 計 學 ( 本 試 題 共 8 頁 )

國 立 體 育 大 學 100 學 年 度 學 士 班 轉 學 考 試 試 題 休 閒 產 業 經 營 學 系 二 年 級 會 計 學 ( 本 試 題 共 8 頁 ) 國 立 體 育 大 學 100 學 年 度 學 士 班 轉 學 考 試 試 題 休 閒 產 業 經 營 學 系 二 年 級 會 計 學 ( 本 試 題 共 8 頁 ) 注 意 : 1. 答 案 一 律 寫 在 答 案 卷 上, 否 則 不 予 計 分 2. 請 核 對 試 卷 准 考 證 號 碼 與 座 位 號 碼 三 者 是 否 相 符 3. 試 卷 彌 封 處 不 得 汚 損 破 壞 4. 行

More information

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives Chapter 1 Starting A Proprietorship: Changes that Affect the Accounting Equation After studying Chapter 1, you will be able to: 1. Define accounting

More information

FINANCIAL ACCOUNTING WEEK 12 STATEMENT OF CASH FLOWS. A. Understand the basic structure and format of the statement of cash flows.

FINANCIAL ACCOUNTING WEEK 12 STATEMENT OF CASH FLOWS. A. Understand the basic structure and format of the statement of cash flows. FINANCIAL ACCOUNTING WEEK 12 STATEMENT OF CASH FLOWS I. LEARNING OBJECTIVES - STATEMENT OF CASH FLOWS A. Understand the basic structure and format of the statement of cash flows. B. Distinguish cash flows

More information

Accounting Self Study Guide for Staff of Micro Finance Institutions

Accounting Self Study Guide for Staff of Micro Finance Institutions Accounting Self Study Guide for Staff of Micro Finance Institutions LESSON 2 The Balance Sheet OBJECTIVES The purpose of this lesson is to introduce the Balance Sheet and explain its components: Assets,

More information

3. ACCOUNTING. 3.3 Capital Assets 3.3.4 Capital Asset System Accounting

3. ACCOUNTING. 3.3 Capital Assets 3.3.4 Capital Asset System Accounting 3. ACCOUNTING 3.3 Capital Assets 3.3.4 Capital Asset System Accounting 3.3.4.10 Once the capital asset system is in operation, the government needs to make sure that assets which should be capitalized

More information

Intermediate Accounting II, ACCT 3322 Solutions to Review Questions, Chapters 17 and 18

Intermediate Accounting II, ACCT 3322 Solutions to Review Questions, Chapters 17 and 18 Intermediate Accounting II, ACCT 3322 Solutions to Review Questions, Chapters 17 and 18 1. Spencer Company's defined benefit pension plan had a PBO of $500,000 on January 1, 2003. During 2003, pension

More information

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940

3,000 3,000 2,910 2,910 3,000 3,000 2,940 2,940 1. David Company uses the gross method to record its credit purchases, and it uses the periodic inventory system. On July 21, 20D, the company purchased goods that had an invoice price of $ with terms

More information

GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2013

GENERAL LIGHTING CORPORATION Income Statement For the Year Ended December 31, 2013 Chapter 4 Exercises and Problems Exercise 4 2 Requirement 1 GENERAL LIGHTING CORPORATION Income Statement Revenues and gains: Sales... $2,350,000 Rental revenue... 80,000 Total revenues and gains... 2,430,000

More information

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows

Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Contents Indian Accounting Standard (Ind AS) 7 Statement of Cash Flows Paragraphs OBJECTIVE SCOPE 1 3 BENEFITS OF CASH FLOW INFORMATION 4 5 DEFINITIONS 6 9 Cash and cash equivalents 7 9 PRESENTATION OF

More information

Consolidated balance sheet

Consolidated balance sheet 83 Consolidated balance sheet December 31 Non-current assets Goodwill 14 675.1 978.4 Other intangible assets 14 317.4 303.8 Property, plant, and equipment 15 530.7 492.0 Investment in associates 16 2.5

More information

Understanding A Firm s Financial Statements

Understanding A Firm s Financial Statements CHAPTER OUTLINE Spotlight: J&S Construction Company (http://www.jsconstruction.com) 1 The Lemonade Kids Financial statement (accounting statements) reports of a firm s financial performance and resources,

More information

How to Prepare a Cash Flow Statement

How to Prepare a Cash Flow Statement How to Prepare a Cash Flow Statement Peoples Bank Business Resource Center Business Builder 4 peoplesbancorp.com 800.374.6123 Table of Contents What to Expect... 4 What You Should Know Before Getting

More information

A Simple Model. Cash Flow Statement

A Simple Model. Cash Flow Statement An introduction to the cash flow statement in the context of building a financial model. This series introduces the financial statements in the context of a financial model. Cash Flow Statement NOTES TO

More information

In this chapter, we build on the basic knowledge of how businesses

In this chapter, we build on the basic knowledge of how businesses 03-Seidman.qxd 5/15/04 11:52 AM Page 41 3 An Introduction to Business Financial Statements In this chapter, we build on the basic knowledge of how businesses are financed by looking at how firms organize

More information

Cash Flow Statement. IPCC Paper 1: Accounting/Financial Management Chapter 2 -Unit 2. CA. Pankaj Goel

Cash Flow Statement. IPCC Paper 1: Accounting/Financial Management Chapter 2 -Unit 2. CA. Pankaj Goel Cash Flow Statement IPCC Paper 1: Accounting/Financial Management Chapter 2 -Unit 2 1 CA. Pankaj Goel Questions that Cash Flow Statement Answers 1 Where did the cash come from? 2 3 What purpose cash used

More information

6. Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation.

6. Depreciation is a process of a. asset devaluation. b. cost accumulation. c. cost allocation. d. asset valuation. 1. A company purchased land for $72,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start.

More information

Most economic transactions involve two unrelated entities, although

Most economic transactions involve two unrelated entities, although 139-210.ch04rev.qxd 12/2/03 2:57 PM Page 139 CHAPTER4 INTERCOMPANY TRANSACTIONS LEARNING OBJECTIVES After reading this chapter, you should be able to: Understand the different types of intercompany transactions

More information

Investments and advances... 313,669

Investments and advances... 313,669 Consolidated Financial Statements of the Company The consolidated balance sheet, statement of income, and statement of equity of the Company are as follows. Please note the Company s consolidated financial

More information

02.Murray Company debited Prepaid Insurance for $960 on July 1, 1998 for a one-year

02.Murray Company debited Prepaid Insurance for $960 on July 1, 1998 for a one-year 八 十 八 學 年 度 會 計 學 考 古 題 題 目 難 易 的 順 序 ( 難 易 ) 為 : I III II I Multiple Choice (74%) 01.The purchase of office equipment for $15,000 cash a. is a cash outflow from financing activities. b. is a cash outflow

More information

International Financial Accounting (IFA)

International Financial Accounting (IFA) International Financial Accounting (IFA) Preparation and presentation of Financial Statements DEPARTMENT OF BUSINESS AND LAW ROBERTO DI PIETRA SIENA, NOVEMBER 4, 2013 1 INTERNATIONAL FINANCIAL ACCOUNTING

More information

Oklahoma State University Spears School of Business. Financial Statements

Oklahoma State University Spears School of Business. Financial Statements Oklahoma State University Spears School of Business Financial Statements Slide 2 Sources of Information Annual reports (10K) & Quarterly reports (10Q) SEC EDGAR Major databases COMPUSTAT(access through

More information

10-1. Auditing Business Process. Objectives Understand the Auditing of the Enteties Business. Process

10-1. Auditing Business Process. Objectives Understand the Auditing of the Enteties Business. Process 10-1 Auditing Business Process Auditing Business Process Objectives Understand the Auditing of the Enteties Business Process Identify the types of transactions in different Business Process Asses Control

More information