ACC 301 Ch. 21 Statement of Cash Flows
indirect
by the ____ method, the net cash increase or decrease from operating activities is derived by starting with reported net income and working backwards to convert that amount to a cash basis
direct method
cash effect of each operating activity (i.e., income statement item) is reported directly on the statement of cash flows
operating
cash flows from _____ activities are the elements of net income, but reported on a cash basis
cash basis
cash flows from operating activities are the elements of net income, but reported on a ______
investing
cash payments to acquire Investments in securities (except cash equivalents and trading securities) is what type of activity?
investing
cash payments to acquire Property, plant, and equipment and other productive assets is what type of activity?
investing
cash payments to acquire non-trade receivables is what type of activity?
operating
cashflows from ____ activities are the elements of net income but reported on a cash basis
Investing (activity)
collection of nontrade note receivable
policy
company must establish a ____ in which short-term, highly liquid investments it classifies as cash equivalents should be disclosed in the notes to the financial statement
operating (activity)
employee salaries
gain (or loss)
equals cash received in the sale of an asset minus book value of the asset
Accounts Receivable
for sales revenue, _____ is the balance sheet account affected
subtract
if there is a decrease in current liabilities you ____ that to the net income to calculate net cash flows from operating activities
subtract
if there is an increase in current assets you ____ that to the net income to calculate net cash flows from operating activities
add
if there is an increase in current liabilities you ____ that to the net income to calculate net cash flows from operating activities
add
if there is decrease in current assets you ____ that to the net income to calculate net cash flows from operating activities
operating activities
include the events and transactions that determine day to day activities
Operating (activities)
includes Current assets (except cash) and Current liabilities (excluding dividends payable and short-term notes payable)
investing (activities)
includes non-current assets/ long-term assets
financing (activities)
includes: long-term liabilities, short-term notes payable, capital stock and treasury stock, dividends declared and dividends payable.
operating (activity)
income taxes
financing activities
inflows and outflows of cash resulting from the external financing of a business
Financing (activity)
issuance of a long-term note payable
Financing (activity)
issuance of a short-term note payable
Financing (activity)
issuance of bonds
Investing (activity)
loan to another company
operating (activity)
merchandise sale
Financing (activity)
Sale of common stock
investing activities
outflows and inflows of cash caused by the acquisition and disposition of assets. Includes cash payments to acquire - PPE - intangible assets - investment in securities (except cash equivalents and trading securities) - non-trade receivables
investing
outflows and inflows of cash from ______ activities are caused by the acquisition and disposition of assets.
Financing (activity)
payment of a cash dividend
operating (activity)
payment of semiannual interest on bonds payable
Investing (activity)
purchase of a building
operating (activity)
purchase of merchandise
Financing (activity)
purchase of treasury stock
Financing (activity)
repayment of a note payable
Financing (activity)
retirement of common stock
Investing (activity)
sale of a copyright
Investing (activity)
sale of equipment at a gain
Investing (activity)
sale of land
indirect method
starts with net income and adjusts for non-cash transactions and other cash used by or provided by normal daily activities
financing
sum of cash inflows from sale of common stock, preferred stock and the issuance of bonds and treasury stocks and other LT debts. Less cash outflows from buyback of stock, repayment of debt, and payment of cash dividends to shareholders etc. = net cash flows from _____ activities
investing
sum of cash inflows from sale of long-term assets minus cash outflows from purchase of long-term assets = net cash flow from _____ activities
indirect method
the net cash increase or decrease from operating activities is derived by starting with reported NET INCOME and working backwards to convert that amount to a CASH BASIS
true
true or false: cash flows from investing activities include investments in assets and their subsequent sale
true
true or false: for income statement accounts amounts reported in the income statement usually are not the same as the cash effects reported
false
true or false: for income statement accounts, amounts reported in the income statement usually are the same as the cash effects reported
true
true or false: for sales revenue, relating sales and the change in accounts receivable during the period helps determine the amount of cash received from customers
true
true or false: net amount of cash inflows and outflows reconciles the change in the company's beginning and ending cash balances
true
true or false: there is no differentiation between amounts held as cash and amounts held in cash equivalent investments or as restricted cash
true
true or false: there is no differentiation between cash and cash equivalent investments
neither (moves from one cash account to another "cash account")
would recording the purchase of a treasury bill be an inflow or outflow of cash?
Investing (activity)
acquisition of bonds of another corporation
investing
(cash inflows from) Sale of long-term assets minus (cash outflows from) purchase of long-term assets = net cash flow from _____ activities
outflow
Cash inflow or outflow: Financing Activity: buyback of stock
outflow
Cash inflow or outflow: Financing Activity: payment of cash dividends to shareholders
outflow
Cash inflow or outflow: Financing Activity: repayment of debt
inflow
For this financing activity, issuance of bonds and notes, is this a cash inflow or an outflow?
inflow
For this financing activity, issuance of stock, is this a cash inflow or an outflow?
outflow
For this financing activity, payment of cash dividends, is this a cash inflow or an outflow?
outflow
For this financing activity, repayment of debt, is this a cash inflow or an outflow?
outflow
For this financing activity, repurchase of stock, is this a cash inflow or an outflow?
inflow
For this investing activity, Sale of investments in securities, is this an inflow or an outflow?
inflow
For this investing activity, collections of loans, is this a cash inflow or an outflow?
outflow
For this investing activity, loans to others, is this a cash inflow or an outflow?
outflow
For this investing activity, purchase of PPE and Intangible assets, is this a cash inflow or an outflow?
outflow
For this investing activity, purchase of investments in securities, is this a cash inflow or an outflow?
inflow
For this investing activity, sale of PPE and intangible assets. is this an inflow or an outflow?
inflow
For this operating activity, Cash received from revenues, is this an inflow or an outflow?
outflow
For this operating activity, cash paid for expenses, is this a cash inflow or an outflow?
false
True or false: Mere transfers from cash-to-cash equivalents or from cash equivalents to cash should be reported on the statement of cash flows.
True
True or false: Mere transfers from cash-to-cash equivalents or from cash equivalents to cash should not be reported on the statement of cash flows.
