Statement Of Cash Flow From by jessifer

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									              CHAPTER 10 - STATEMENT OF CASH FLOWS

A.    SOURCES/USES OF CASH

      NET CASH FLOWS FROM:                    OPERATING ACTIVITIES
                                              INVESTING ACTIVITIES
                                              FINANCING ACTIVITIES

B.    STATEMENT FORMAT

      1.    Net Cash Flows from Operating Acitivities
      2.    Net Cash Flows from Investing Activities
      3.    Net Cash Flows from Financing Activities
      4.    Net Increase(Decrease) in Cash
      5.    Non-cash Investing and Financing Activities (Significant)

            (a)       Operating Activities

                  Any transaction that enters into the determination of Net Income
            except gains and losses on (a) sale of noncurrent assets and (b)
      repayment of debt.

            (b)       Investing Activities

                      Lending money and collecting on those loans, acquiring and disposing
                      of investments (current and noncurrent) and productive noncurrent
            assets.

            (c)       Financing Activities

                   Any transaction (other than payment of interest) involving borrowing
             from creditors, and any transaction (except stock dividends and stock
     splits since they are neither sources nor uses of cash) involving the
owners of the company.




                                        AMIS 211
                 PREPARATION OF STATEMENT
Data Sources:
      1.    Comparative balance sheets (current and prior year balance sheets).
      2.    Current income statement for cash provided by or used by operations.
      3.    Selected data from general ledger.

Steps
        1.     Compute change in cash balance (Balance Sheet).
        2.     Compute net cash flows from operating, investing and financing
        activities.

Computing Net Cash Flow from Operating Activities:

1.      Direct Approach   Convert accrual-basis income statement to the cash basis.

2.      Indirect Approach-Adjust net income (loss) items included in net income
                    (loss) that did not affect cash.

        (a)   Additions to Net Income (loss)

              Depreciation Expense
              Amortization Expense
              Depletion Expense
              Losses related to noncurrent assets, debt & equity
              Decrease in Receivables (net of allowance)
              Decrease in Inventory
              Decrese in Prepaid Expenses
              Increase in Accounts Payable
              Increase in Accrued Liabilities

        (b)   Subtractions from Net Income (loss)

              Gains related to noncurrent assets, debt & equity
              Increase in Receivables
              Increase in Inventory
              Increase in Prepaid Expenses
              Decrease in Accounts Payable
              Decrease in Accued Liabilities


                                AMIS 211

								
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