ACC 221 1st Edition Lecture 32Outline of Previous Lecture- Section 31: Equity Cont. Common Stocko Authorizing shareso Earnings/ shareOutline of Current Lecture - Section 32: Statement of Cash Flow Financial Statemento Introductiono Types of transactions o Balance Sheetso Writing the StatementCurrent Lecture- Section 32: Statement of Cash Flow Financial Statemento 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 handso 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 activityo Balance sheets Look at current balance sheet and balance sheet of former accounting cycle- Look at how accounts have either increased or decreasedThese 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 casho Liabilities Increase = source of cash Decrease = use of casho Owner’s equity Increase = source of cash Decrease = use of casho 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 accounto Show as a negative on the balance sheer- Source – add back to net income- Use – subtract from let
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