会计学-企业决策的基础-14版.ppt

1、,STATEMENT OF CASH FLOWS,Chapter13,Learning Objective,LO1,Explain the purposes and uses of a statement of cash flows.,Provides information about the cash receipts and cash payments of a business entity during the accounting period.,Helps investors with questions about the companys Ability to generat

2、e positive cash flows. Ability to meet its obligations and to pay dividends. Need for external financing. Investing and financing transactions for the period.,Purpose of the Statement of Cash Flows,Learning Objective,LO2,Describe how cash transactions are classified in a statement of cash flows.,The

3、 Statement of Cash Flows must include the following three sections: Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities,Classification of Cash Flows,Learning Objective,LO3,Compute the major cash flows relating to operating activities.,Inflow

4、s from: Interest and dividends received. Sales to customers.,Cash Flows from Operating Activities,Operating Activities,Outflows to: Suppliers of merchandise and services. Employees. Lenders for interest. Governments for taxes.,Learning Objective,LO4,Compute the cash flows relating to investing and f

5、inancing activities.,Cash Flows from Investing Activities,Inflows from: Selling investments and plant assets. Collecting of principal on loans.,Outflows to: Purchase of investments and plant assets. Purchase debt or equity investments. Make loans.,Investing Activities,Inflows from: Short-term and lo

6、ng-term borrowing. Owners (for example, from issuing stock).,Outflows to: Make payments on borrowed funds. Owners for dividends. Purchase treasury stock.,Financing Activities,Cash Flows from Financing Activities,Cash Equivalents,Cash,Currency,Short-term, highly liquid investments. Readily convertibl

7、e into cash. So near maturity that market value is unaffected by interest rate changes.,Cash and Cash Equivalents,Learning Objective,LO5,Distinguish between the direct and indirect methods of reporting operating cash flows.,The operating cash flows section can be prepared using either the direct met

8、hod or the indirect method.,Lets look at the direct method for preparing the Statement of Cash Flows.,Accrual basis revenue includes sales that did not result in cash inflows. Can be computed as:,Direct MethodCash Received from Customers,+,=,=,The accounts receivable balance was $80,000 on 12/31/06

9、and $110,000 on 12/31/07. If accrual sales revenue for 2007 was $900,000, what was cash basis revenue?,Decrease in receivables,Increase in receivables,Net Sales $900,000,Direct MethodCash Received from Customers,Cash Received from Customers,Cash Received from Customers = $870,000,$30,000 Increase in

10、 receivables,=,Net Sales $900,000,Direct MethodCash Received from Customers,The accounts receivable balance was $80,000 on 12/31/06 and $110,000 on 12/31/07. If accrual sales revenue for 2007 was $900,000, what was cash basis revenue?,Lets look at some simplified formulas for computing direct method

11、 cash flows.,Direct MethodInterest and Dividends Received,Step 1 Step 2,Direct MethodCash Paid for Merchandise,How much did Martin Co. pay for inventory in 2007? a. $900,000 b. $923,000 c. $947,000 d. $877,000,Direct MethodCash Paid for Merchandise,Purchases for 2007 were $935,000. Purchases = $900,

12、000 + $35,000 Cash Paid for Merchandise in 2007 was $923,000. Cash Paid = $935,000 - $12,000,After deducting depreciation and other noncash expenses, the cash paid for expenses is affected by (1) whether the expense was prepaid, and (2) whether the expense was accrued.,Direct MethodCash Payments for

13、 Expenses,Now, lets prepare a direct method Statement of Cash Flows for Martin Co.,Direct Method,Direct Method,Direct Method,Direct Method,Additional Information Trading Securities were purchased during 2007 at a cost of $25,000. Equipment with a book value of $40,000 was sold during the year for $4

14、3,000. Equipment with a book value of $30,000 was destroyed during a freak flood in 2007. There was no insurance. Martin owns 25% of the common stock of another company and uses the equity method to account for this investment.,Direct Method,Additional Information Martins tax rate is 40%. The Notes

15、Payable to the bank carry a 12% rate. The payments are due on the first day of each month. The Bonds Payable carry a 9% rate. Interest is payable semiannually on July 1 & Jan. 1. Sold stock during 2007 for $50,000. Received $10,000 dividends from its equity investment.,Direct Method,Cash Received fr

16、om Customers Cash Paid to Employees,Direct Method,Cash Paid for Inventory Cash Paid for Interest,Direct Method,Cash Paid for Taxes Other Operating Cash Flows,Direct Method,Cash Flows From Operating Activities,Equipment with a book value of $40,000 was sold for $43,000.,Notes Payable decreased from $

17、70,000 to $60,000 during 2007.,Bonds Payable decreased from $250,000 to $150,000 during 2007.,Notice that the Ending Cash Balance per the Statement of Cash Flows agrees with the 12/31/07 Cash balance on the Balance Sheet.,Learning Objective,LO6,Explain why net income differs from net cash flows from

18、 operating activities.,Reconciling Net Income withNet Cash Flows,There are two major categories of reconciling items. They include adjusting for: Noncash Expenses. Timing Differences.,Lets look at the indirect method that is used by over 97% of all companies.,Learning Objective,LO7,Compute net cash

19、flows from operating activities using the indirect method.,Net Income,Cash Flows from Operating Activities,Indirect Method,Changes in current assets and current liabilities as shown on the following table.,+ Losses and - Gains,+ Noncash expenses such as depreciation and amortization.,Use this table

20、when adjusting Net Income to Operating Cash Flows.,Indirect Method,Joyce, Inc. has prepared the Balance Sheet as of March 31, 2006, and March 31, 2007. The Income Statement for the year ended 3/31/07 has also been prepared. Joyce needs help preparing the Statement of Cash Flows using the indirect me

21、thod.,Indirect Method,Indirect Method,The $8,000 gain was the result of selling land costing $32,000 for $40,000 cash during the period.,Indirect Method,Indirect Method,Joyce issued $50,000 of no par common stock to settle the $50,000 note payable.,Indirect Method,With the indirect method, always st

22、art with the net income or net loss for the period.,Indirect Method,Indirect Method,Indirect Method,Accounts receivable decreased. 3/31/07 3/31/06 $23,000 - $40,000 = $(17,000),Indirect Method,Accounts payable increased. 3/31/07 3/31/06 $38,000 - $27,000 = $11,000,Indirect Method,Inventory increased

23、. 3/31/07 3/31/06 $350,000 - $300,000 = $50,000,Indirect Method,Salaries payable decreased. 3/31/07 3/31/06 $ 9,000 - $14,000 = $(5,000),Add back non-cash expenses.,Indirect Method,Subtract gains.,Indirect Method,Indirect Method,The operating cash flows amount comes from the schedule just prepared.,

24、Indirect Method,Land originally costing $32,000 was sold for $40,000.,Indirect Method,Dividends of $20,000 were paid to owners during the year.,Indirect Method,Compute the net change in cash for the period.,Indirect Method,Complete the Statement of Cash Flows by reconciling beginning cash to ending cash.,Note that the ending cash amount ties back to Joyces Balance Sheet at 3/31/07.,Indirect Method,In addition, on the face of the statement or in a supplemental schedule, disclose the $50