ACCT 2102 1st Edition Lecture 34 Outline of Last LectureI. Comprehension QuizOutline of Current Lecture:II. Statement of Cash FlowsIII. Organizing the StatementIV. Preparing the StatementV. Direct Method of Preparing the Operating SectionCurrent Lecture: Statement of Cash Flows (Chapter 13)II. What is the Statement of Cash Flows?• One of the four basic financial statements• Shows how the company generated and used cash during the period• Reports the overall increase or decrease in cashCompany NameStatement of Cash FlowsFor the period ended xxxCash provided (or used) by operating activitiesCash provided (or used) by investing activitiesCash provided (or used) by financing activitiesNet increase (or decrease) in cashBeginning CashEnding Cash III. Organizing the Statement• Operating Section• Prepared using either the direct or the indirect method• Reports transactions that affect net income, current assets, and current liabilities• Investing Section• Reports transactions that affect long term assetsThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.• Sources of cash . . . sell property, plant, or equipment, sell stock of other companies,receipt of money loaned to other companies• Uses of cash . . . purchase property, plant, or equipment, purchase stock of other companies, loan money to other companies• Financing Section• Reports transactions that affect long term liabilities and stockholders’ equity• Sources of cash . . . sell company stock, issue long term debt• Uses of cash . . . purchase treasury stock, pay dividends, repay long term debtIV. Preparing the Statement• To prepare the Statement of Cash Flows, you need . . . • The Income Statement for the current period (or select data from the Income Statement)• A comparative Balance Sheet (or changes in Balance Sheet accounts)• Miscellaneous information related to investing and financing transactions• The Operating Section is prepared using . . . • The indirect method . . . start with Net Income and reconcile back to a cash basis• The direct method . . . calculate Income Statement items using the cash basisV. Let’s take a closer look at the direct method of preparing the Operating SectionTypical transactions reported in the section include• Cash receipts from customers• Analyze Sales Revenue from Income Statement and Accounts Receivable from Balance Sheet• Beg A/R + Sales Revenue – Ending A/R = Cash receipts• Cash payments to suppliers for inventory• Analyze COGS from Income Statement and Inventory and Accounts Payable from Balance Sheet• Beg Inv – COGS – End Inv = Purchases• Beg A/P + Purchases - End A/P = Cash paymentsNote . . . If you prepare the Operating Section using the direct method, only the approach changes.The cash flow from Operating Activities is the same under both
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