ACCT 2102 1nd Edition Lecture 19 Outline of Last Lecture II Direct Labor Variances Outline of Current Lecture III Statement of Cash Flows a Operating b Investing c Financing Current Lecture Statement of Cash FLows Operating The operating section of the statement of cash flows is prepared using the direct or indirect method For this class we will be using the direct method To do this method we need to calculate an Income Statement using the cash basis It reports transactions that affect net income current assets and current liabilities Cash receipts and one transaction recorded In this section These receipts are from customers and analyze sales revenue from the income statement and accounts receivable from the balance sheet Cash payments are also recorded These payments are to supplies for inventory These payments analyze Cost of Goods sold from the income statement and inventory and accounts payable from the balance sheet Investing The investing section of the Statement of Cash Flows reports transactions that affect long term assets These sources selling and uses purchases of cash are both recorded The typical transactions for investments are purchases of equipment Financing 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 The financing section reports transactions that affect long term liabilities and stockholder s equity Most transactions recorded here either generate capital for the company or pay it back Usually they are in the form of common stock and retained earnings
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