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,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,YE SUN AccountingEnglish2009,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,YE SUN AccountingEnglish2009,*,YE SUN AccountingEnglish2009,1,Lesson 10,Statement of Cash Flows,YE SUN AccountingEnglish2009,2,Cash and Cash Equivalents,Cash,Currency,Cash Equivalents,Short-term,highly liquid investments.,Readily convertible into cash.,So near maturity that market value is unaffected by interest rate changes.,YE SUN AccountingEnglish2009,3,Purpose of the Statement of Cash Flows,Provides information about the cash receipts and cash payments of a business entity during the accounting period.,Helps investors with questions about the company,s:,Ability to generate positive cash flows.,Ability to meet its obligations and to pay dividends.,Need for external financing.,Investing and financing transactions for the period.,YE SUN AccountingEnglish2009,4,YE SUN AccountingEnglish2009,5,Classification of Cash Flows,The Statement of Cash Flows must include the following three sections:,Cash Flows from,Operating,Activities,Cash Flows from,Investing,Activities,Cash Flows from,Financing,Activities,YE SUN AccountingEnglish2009,6,Outflows,to:,Suppliers of merchandise and services.,Employees.,Lenders for interest.,Governments for taxes.,Inflows,from:,Sales to customers.,Operating Activities,YE SUN AccountingEnglish2009,7,Investing Activities,Inflows,from:,Selling investments or plant assets.,Collecting of principal on loans.,Outflows,to:,Acquire plant assets.,Purchase debt or equity investments.,Make loans.,Cash Flows from Investing Activities,+,_,YE SUN AccountingEnglish2009,8,Financing Activities,Inflows,from:,Short-term and long-term borrowing.,Owners(for example,from issuing stock).,Outflows,to:,Repayments of borrowed funds.,Owners for dividends.,Purchase treasury stock.,Cash Flows from Financing Activities,+,_,YE SUN AccountingEnglish2009,9,The operating cash flows section can be prepared using either the,direct method,or the,indirect method.,YE SUN AccountingEnglish2009,10,Let,s look at the,Direct Method,for preparing the Statement of Cash Flows.,Direct Method,YE SUN AccountingEnglish2009,11,Accrual basis revenue includes sales,that,did not result in cash inflows.,Can be computed as:,Revenue,Cash basis,Decrease,in receivables,Increase,in receivables,+,=,=,Revenue,Accrual basis,Direct MethodCash Received from Customers,YE SUN AccountingEnglish2009,12,+,=,=,The A/R balance was$40,000 on 1/1/99 and$52,000 on 12/31/99.If accrual sales revenue for 1999 was$800,000,what was cash basis revenue?,Revenue,Cash basis,Decrease,in receivables,Increase,in receivables,Revenue,Accrual basis$800,000,Direct MethodCash Received from Customers,YE SUN AccountingEnglish2009,13,Revenue,Cash basis$788,000,Decrease in receivables,$12,000,Increase in receivables,+,=,=,Revenue,Accrual basis$800,000,The A/R balance was$40,000 on 1/1/99 and$52,000 on 12/31/99.If accrual sales revenue for 1999 was$800,000,what was cash basis revenue?,Direct MethodCash Received from Customers,YE SUN AccountingEnglish2009,14,Now that we understand the process,let,s look at some simplified formulas for computing direct method cash flows.,YE SUN AccountingEnglish2009,15,Direct MethodInterest and Dividends Received,YE SUN AccountingEnglish2009,16,Direct MethodCash Paid for Merchandise,Step 1,Step 2,YE SUN AccountingEnglish2009,17,Direct MethodCash Paid for Merchandise,How much did Lug Lite pay for inventory in 1999?,a.$900,000,b.$923,000,c.$947,000,d.$877,000,YE SUN AccountingEnglish2009,18,Direct MethodCash Paid for Merchandise,How much did Lug Lite pay for inventory in 1999?,a.$900,000,b.,$923,000,c.$947,000,d.$877,000,Purchases for 1999 were,$935,000,.,Purchases=$900,000+$35,000,Cash Paid for Merchandise in 1999 was,$923,000,.,Cash Paid=,$935,000,-$12,000,YE SUN AccountingEnglish2009,19,Direct MethodCash Payments for Expenses,After deducting depreciation and other noncash expenses,the cash paid for expenses is affected by,(1)whether the expense was prepaid,and,(2),whether the expense was accrued.,YE SUN AccountingEnglish2009,20,Indirect Method,Net Income,Cash Flows from Operating Activities,Changes in current assets and current liabilities as shown on the following table.,+,Losses and-Gains,+,Noncash expenses such as depreciation and amortization.,YE SUN AccountingEnglish2009,21,Use this table when adjusting Net Income to Operating Cash Flows.,Indirect Method,Determining investing activities,Cash+/-,Long-term assets-/+,YE SUN AccountingEnglish2009,22,Determining financing activities,Cash+/-,Long-term liabilities+/-(mostly),Owners equity+/-,YE SUN AccountingEnglish2009,23,YE SUN AccountingEnglish2009,24,Managing Cash Flows,Cash Budgets,are used by management to plan and forecast future cash flows.,Chart Title,Force management to coordinate activities.,Provide managers with advance notice of available resources.,Provide targets useful in evaluating performance.,Provide advance warnings of potential cash shortages.,A Cash Budget can be used
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