ACC 221 1st Edition Lecture 32 Outline of Previous Lecture Section 31 Equity Cont Common Stock o Authorizing shares o Earnings share Outline of Current Lecture Section 32 Statement of Cash Flow Financial Statement o Introduction o Types of transactions o Balance Sheets o Writing the Statement Current Lecture Section 32 Statement of Cash Flow Financial Statement o Introduction What happens with your cash Transactions raise or decrease funds Why This financial statement aims to explain what happened to your cash This is understood through looking into other accounts Only interested when cash exchanges hands o Types of transactions Financing activity Dr cash 50 000 issuing stock Financing activity cash increases issue shared stock Investing activity Invest 30 000 in land and equipment Investing activity cash decreases buying land Equip Operating activity o Balance sheets Look at current balance sheet and balance sheet of former accounting cycle Look at how accounts have either increased or decreased These 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 o Assets Increase use of cash Decrease source of cash o Liabilities Increase source of cash Decrease use of cash o Owner s equity Increase source of cash Decrease use of cash o Writing the statement Combine both sources and uses separately for assets liabilities and owner s equity Categorize each on financial sheet within their categories financing investing operating Indirect method Only affects operating activities with net income Add and subtract transactions that have nothing to do with cash account o Show as a negative on the balance sheer Source add back to net income Use subtract from let income
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