會計學(xué)原理英文教學(xué)課件：Chapter-16 Reporting the Statement of Cash flows

1、REPORTING THE STATEMENT OF CASH FLOWSChapter 16How does a company obtain its cash?Where does a company spend its cash?What explains the change in the cash balance?PURPOSE OF THE STATEMENTOF CASH FLOWSC 1How did the business fund its operations?Did the business borrow any funds or repay any loans?Doe

2、s the business have sufficient cash to pay its debts as they mature?Did the business make any dividend payments?IMPORTANCE OF CASH FLOWSC 1CashCurrencyCash EquivalentsShort-term, highly liquid investments.Readily convertible into cash.Sufficiently close to maturity so that market value is unaffected

3、 by interest rate changes.MEASUREMENT OF CASH FLOWSC 1CLASSIFICATION OF CASH FLOWS The Statement of Cash Flows includes the following three sections:Operating ActivitiesInvesting ActivitiesFinancing ActivitiesC 2OutflowsSalaries and wagesPayments to suppliersTaxes and finesInterest paid to lendersOt

4、herInflowsReceipts from customersCash dividends receivedInterest from borrowersOther.OPERATING ACTIVITIESC 2OutflowsPurchasing long-term productive assetsPurchasing equity investmentsPurchasing debt investmentsOtherInflowsSelling long-term productive assetsSelling equity investmentsCollecting princi

5、pal on loansOtherINVESTING ACTIVITIESC 2OutflowsPay dividendsPurchasing treasury stockRepaying cash loansPaying owners withdrawalsInflowsIssuing its own equity securitiesIssuing bonds and notesIssuing short- and long-term liabilitiesContributions by ownersFINANCING ACTIVITIESC 2NONCASH INVESTING AND

6、 FINANCING Items requiring separate disclosure include:Retirement of debt by issuing equity securities.Conversion of preferred stock to common stock.Leasing of assets in a capital lease transaction.C 3FORMAT OF THE STATEMENTOF CASH FLOWSC 4There are two acceptable methods to determine Cash Flows fro

7、m Operating Activities: Direct Method Indirect MethodFORMAT OF THE STATEMENTOF CASH FLOWSWhile each method uses a different format to arrive at Net Cash Provided (Used) by Operating Activities, the end result is the same under each method.C 4Lets look at the Indirect Method for preparing the Cash Fl

8、ows from Operating Activities section.PREPARING THE STATEMENTOF CASH FLOWSNearly all companies use the indirect method.P 1PREPARING THE STATEMENTOF CASH FLOWSPreparing a statement of cash flows involves five steps:Compute the net increase or decrease in cash;Compute and report net cash provided or u

9、sed by operating activities;Compute and report net cash provided or used by investing activities;Compute and report net cash provided or used by financing activities;Compute the net cash flow by combining net cash provided or used by operating, investing, and financing activities and then prove it b

10、y adding it to the beginning cash balance to show that it equals the ending cash balance.P 1Net IncomeCash Flows from Operating ActivitiesChanges in current assets and current liabilities.+ Losses and - Gains+ Noncash expenses such as depreciation and amortization.INDIRECT METHODP 2Use this table wh

11、en adjusting Net Income to Operating Cash Flows.INDIRECT METHODP 2INDIRECT METHOD EXAMPLEEast, Inc. reports $125,000 net income for the year ended December 31, 2009. Accounts Receivable increased by $7,500 during the year and Accounts Payable increased by $10,000. During 2009, East reported $12,500

12、of Depreciation Expense.What is East, Inc.s Operating Cash Flow using the indirect method for 2009?P 2Net income125,000Net income125,000$ INDIRECT METHOD EXAMPLEFor the indirect method, start with net income.P 2Net income125,000Add: Depreciation expense12,500Net income125,000$ Add: Depreciation expe

13、nse12,500Add noncash expenses such as depreciation, depletion, amortization, or bad debt expense.INDIRECT METHOD EXAMPLEP 2Net income125,000Add: Depreciation expense12,500Deduct: Increase in accounts receivable(7,500)Net income125,000$ Add: Depreciation expense12,500Deduct: Increase in accounts rece

14、ivable(7,500)INDIRECT METHOD EXAMPLEP 2Net income125,000Add: Depreciation expense12,500Deduct: Increase in accounts receivable(7,500)Add: Increase in accounts payable10,000Cash provided by operating Net income125,000$ Add: Depreciation expense12,500Deduct: Increase in accounts receivable(7,500)Add:

15、Increase in accounts payable10,000Cash provided by operating INDIRECT METHOD EXAMPLEP 2Net income125,000Add: Depreciation expense12,500Deduct: Increase in accounts receivable(7,500)Add: Increase in accounts payable10,000Cash provided by operating activities140,000Net income125,000$ Add: Depreciation

16、 expense12,500Deduct: Increase in accounts receivable(7,500)Add: Increase in accounts payable10,000Cash provided by operating activities140,000$ If we used the Direct Method, we would get the same $140,000 for Cash Provided by Operating Activities.INDIRECT METHOD EXAMPLEP 2Now lets prepare a complet

17、e Statement of Cash Flows for B&G Company using the indirect method.INDIRECT METHOD EXAMPLEP 2P 2Additional Information for 2010:Net income was $105,000.Cash dividends declared and paid were $40,000.Bonds payable of $50,000 were redeemed for $50,000 cash.Common stock was issued for $35,000 cash. IND

18、IRECT METHOD EXAMPLEP 2Add noncash expenses and losses.Subtract noncash revenues and gains.Start with accrual-basis net income.Then, analyze the changes in current assets and current liabilities.P 2P 2Now, lets complete the investing section.P 2Now, lets complete the financing section.P 3P 3ANALYZING CASH SOURCES AND USESA 1 Used, along with income-based ratios, to assess company performance.Cash flow on total assets =Operating cash flows Average total assetsCASH FLOW ON TOTAL ASSETSA 2Here ar