Accounting Chapter 23
CHAPTER 23
Statement of Cash Flows
LEARNING OBJECTIVES
1. 2. 3. 4. 5. 6. 7. 8. 9. Describe the purpose of the statement of cash flows. Identify the major classifications of cash flows. Differentiate between net income and net cash flows from operating activities. Contrast the direct and indirect methods of calculating net cash flows from operating activities. Determine net cash flows from investing and financing activities. Prepare a statement of cash flows. Identify sources of information for a statement of cash flows. Discuss special problems in preparing a statement of cash flows. Explain the use of a work sheet in preparing a statement of cash flows.
Copyright © 2010 John Wiley & Sons, Inc.
Kieso, Intermediate Accounting, 13/e Instructor’s Manual
(For Instructor Use Only)
23-1
CHAPTER REVIEW
1. Corporate investors and potential investors seek information about the financial position, results of operations, and cash flow. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Chapter 23 describes the significance of the statement of cash flows and all aspects of its preparation. Numerous examples are included which assist in an understanding of how the statement is prepared and presented. Purpose of the Statement of Cash Flows 2. (S.O. 1) The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. Classification of Cash Flows 3. (S.O. 2) The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include
Statement of Cash Flows
LEARNING OBJECTIVES
1. 2. 3. 4. 5. 6. 7. 8. 9. Describe the purpose of the statement of cash flows. Identify the major classifications of cash flows. Differentiate between net income and net cash flows from operating activities. Contrast the direct and indirect methods of calculating net cash flows from operating activities. Determine net cash flows from investing and financing activities. Prepare a statement of cash flows. Identify sources of information for a statement of cash flows. Discuss special problems in preparing a statement of cash flows. Explain the use of a work sheet in preparing a statement of cash flows.
Copyright © 2010 John Wiley & Sons, Inc.
Kieso, Intermediate Accounting, 13/e Instructor’s Manual
(For Instructor Use Only)
23-1
CHAPTER REVIEW
1. Corporate investors and potential investors seek information about the financial position, results of operations, and cash flow. The required presentation of the statement of cash flows provides financial statement users with information about the major sources and uses of cash during the fiscal period. Chapter 23 describes the significance of the statement of cash flows and all aspects of its preparation. Numerous examples are included which assist in an understanding of how the statement is prepared and presented. Purpose of the Statement of Cash Flows 2. (S.O. 1) The information in a statement of cash flows should help investors, creditors, and others to assess: (1) the entity’s ability to generate future cash flows; (2) the entity’s ability to pay dividends and meet obligations; (3) the reasons for the difference between net income and net cash flow from operating activities; and (4) the cash and noncash investing and financing transactions during the period. Classification of Cash Flows 3. (S.O. 2) The statement of cash flows classifies cash receipts and cash payments by operating, investing, and financing activities. Operating activities include