Ch16 Statement Of Cash Flows

Topics: Generally Accepted Accounting Principles, Cash flow statement, Balance sheet Pages: 60 (3127 words) Published: December 3, 2014
Chapter 16
Statement of Cash Flows
Accounting, 21st Edition
Warren Reeve Fess

PowerPoint Presentation by Douglas Cloud
Professor Emeritus of Accounting
Pepperdine University

© Copyright 2004 South-Western, a division
of Thomson Learning. All rights reserved.
Task Force Image Gallery clip art included in this
electronic presentation is used with the permission of
NVTech Inc.

Some
Some of
of the
the action
action has
has been
been automated,
automated, so
so
click
click the
the mouse
mouse when
when you
you see
see this
this
lightning
lightning bolt
bolt in
in the
the lower
lower right-hand
right-hand
corner
corner of
of the
the screen.
screen. You
You can
can point
point and
and
click
click anywhere
anywhere on
on the
the screen.
screen.

Objectives
Objectives
1. SummarizeAfter
the types
of cash
studying
this
After
studying
this flow
activities reported
in
the
statement of cash
chapter,
you
should
chapter, you should
flows.
be
be able
able to:
to:
2. Prepare a statement of cash flows, using
the indirect method.
3. Prepare a statement of cash flows, using
the direct method.
4. Calculate and interpret the free cash flow.

Reporting
Reporting Cash
Cash Flows
Flows
The statement of cash flows reports cash flows
by three types of activities:
1. Cash flows from operating activities –
transactions that affect net income.
2. Cash flows from investing activities –
transactions that affect noncurrent assets.
3. Cash flows from financing activities –
transactions that affect equity and debt of the entity.

Reporting
Reporting Cash
Cash Flows
Flows
Increases in Cash

Operating

Decreases in Cash

Operating

(receipts from
revenues)

(payments for
expenses)

Investing

Investing

(receipts from sales of
noncurrent assets)

Financing
(receipts from issuing
equity and debt securities)

(payments for acquiring
noncurrent assets)

Financing
(payments for treasury stock,
dividends, and redemption of debt
securities)

Cash
Cash Flows
Flows from
from Operating
OperatingActivities
Activities
Typical cash inflows
What are some of the
typical cash inflows from
operating activities?`

Typical cash outflows
What are some of the
typical cash outflows from
operating activities?

Sales of goods
and services

Merchandise
purchases

Interest
revenue

Payments of
wages and
other expenses

Dividend
revenue

Tax payments

Cash
Cash Flows
Flows from
from Investing
InvestingActivities
Activities
Typical cash inflows
What are some of the typical
cash inflows from investing
activities?
Sales of fixed
assets
Sale of longterm
investments

Typical cash outflows
What are some of the
typical cash outflows
from investing
activities?
Purchase of
fixed assets
Purchase of
long-term
investments

Cash
Cash Flows
Flows from
from Financing
FinancingActivities
Activities
Typical cash inflows
What are some of the
typical cash inflows from
financing activities?

Typical cash outflows
What are some of the
typical cash outflows from
financing activities?

Issuing bonds
and long-term
notes payable

Paying cash
dividends

Issuing
preferred and
common stock

Repaying debt
Acquiring
treasury stock

Noncash
Noncash Investing
Investing and
and
Financing
Financing Activities
Activities
 Issuing bonds to acquire land
 Issuing common stock for

convertible preferred stock
 Issuing a long-term note to

acquire equipment
 Issuing a stock dividend

No
No cash
cash flow
flow per
per share
share isis reported
reported in
in
the
the financial
financial statements
statements because
because the
the
user
user might
might incorrectly
incorrectly interpret
interpret this
this as
as
the
the amount
amount available
available for
for dividends.
dividends.

The
The Indirect
Indirect Method
Method
Balance Sheet
Cash...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Financial Statement and Cash Flows
  • Statement of Cash Flow Research Paper
  • Statement of Cash Flows Essay
  • Essay on Cash Flow Statement
  • Statement of Cash Flows Essay
  • Cash Flow Statements Research Paper
  • Cash Flow Statement Research Paper
  • Income Statement and Statement of Cash Flows Essay

Become a StudyMode Member

Sign Up - It's Free