Chapter 16 - Reporting the Statement of Cash Flows
Operating
Receipt of cash dividends from investments is a __________ activity.
Subtracted
Revenues and gains with no cash inflows are ________ from net income.
analyze increase or decrease in cash, operating activities, investing activities, financing activities
Statement of Cash Flows order
Statement of Cash Flows
Statement used to report cash receipts (inflows) and cash payments (outflows) during a period.
Free cash flow
The amount of operating cash flow remaining after replacing current productive capacity and maintaining current dividends
F
The purchase of long-term assets using a long-term note payable affects cash receipts or payments. T or F?
accounts relating to investing activities are
a. investments b. land c. building d. plant and equipment e. other long-term assets
accounts relating to financing activities are
a. mortgage payable b. long term debt c. dividends payable d. capital stock
accounts relating to operating activities are
a. net income from operations b. depreciation/ amortization c. accounts receivable d. inventory e. supplies f. prepaid expenses g. accounts payable h. salaries payable i. taxes payable j. gain/loss on the sale of investments
Cash flows from financing activities
includes all cash transactions from debt and stock including dividends . cash flows from transactions that affect the equity and debt of the business
Cash flows from investing activities
includes all cash transactions from investments, plant assets, and other non-current assets. cash flows from transactions that affect the investments and noncurrent assets
Cash flows from operating activities
includes all cash transactions that enter into the determination of income from operations. cash flows from transactions that affect net income
Cash flow per share
normally computed as cash flow from operations per share
3
A debt security must be within _____ months of its maturity to satisfy the cash equivalent criteria.
Direct method
A method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments
Indirect method definition
A method of reporting the cash flows from operating activities as the net income from operations adjusted for all deferrals of pas cash receipts and payments and all accruals of expected future cash receipts and payments.
Investing
A sale of plant assets is part of _______ activities
Statement of cash flows
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year
Investing Activities
Activities that include those transactions and events that affect long-term assets-namely, the purchase and sale of long-term assets. Includes the purchase and sale of short-term investments in the securities of other entities, except trading securities, and lending and collecting money for notes receivable.
Financing activities
Activities that include those transactions and events that affect long-term liabilities and equity. Such as obtaining cash from issuing debt and repaying the amounts borrowed and receiving cash from or distributing cash to owners.
Operating activities
Activities whose transactions and events that determine net income.
Operating
Cash collections from customers is a __________ activity.
Operating, investing, and financing activities
Cash flow categories
Indirect method
Method of reporting net income and then adjusting it for items necessary to obtain net cash provided or used by operating activities.
Direct Method
Method of separately listing each major item of operating cash receipts (such as cash received from customers) and each major item of operating cash payments (such as cash paid for inventory).
Financing
Note payable issued for cash is a __________ activity.
current assets and current liabilities
Operating activities, besides being affected by the income statement, are also affected by changes in _________ and _________.
Investing
Purchase of equipment for cash is a __________ activity.
No cash effect
Items such as depreciation, amortization, and depletion have ______ _______ _______.
does not
Cash flows ______ report transactions between cash and cash equivalents.
Cash and Cash Equivalents
Cash flows are defined to include both _____ and _______
noncurrent, current
Cash flows from investments are computed by identifying all _________ asset accounts and the ______ accounts for both notes receivable and investments in securities (excluding trading securities).
Operating
Cash paid for utilities is a __________ activity.
Investing
Cash paid to acquire investments is a __________ activity.
Financing
Cash paid to retire debt is a __________ activity.
Operating
Cash payment of wages is a __________ activity.
Operating
Cash received as interest on investments is a __________ activity.
Financing
Cash received from a bank loan is a __________ activity.
Investing
Cash received from selling investments is a __________ activity.
Added
Decreases in current assets are ______ to net income.
subtracted
Decreases in current liabilities are _______ from net income.
added back
Expenses and losses with no cash outflows are____ ____ to net income
Long-term liabilities and equity
Financing activities are affected by changes in _________ and _________.
subtracted
Increases in current assets are ______ from net income.
added
Increases in current liabilities are _____ to net income.
long-term assets
Investing activities are affected by changes in _________.
Financing
Issuance of stock for cash is a __________ activity.