Escolar Documentos
Profissional Documentos
Cultura Documentos
Current Liabilities
except s-t notes payable which are financing
General Theory
Take revenue or expense account (includes
cash and accrual)
adjust out accrual amounts
Result is net cash in or out.
Too expensive to classify all cash transactions into
operating, financing, investing activities. Cheaper to use
accrual systems and adjust out accrual information
Operating Activities
Indirect Method
Net Income
+ Depreciation exp (noncash exp)
+ Losses from sale of assets
Sales
+ Beg Net A/R
- End Net A/R
- Bad debt exp adj
- Beg unearned rev
+ End undearned rev
= Cash from
Customers
Sales
+ Beg A/R
- End A/R
- writeoffs
= beg allowance + bad debt exp. ending allowance
Interest Exp
+ Beg interest payable
- End interest payable
= Cash paid for interest
Example Equipment
Balance Sheet Amount Change: Beg
$300,000, Ending $400,000
Can your just say net cash out for
equipment was $100,000?
Why?
Example Equipment
Results on Cash Flow Statement
Cash from sale of equipment $65,000
Gain on sale $25,000 subtracted from NI on indirect method (make
sure amt is not included in direct method either)
Equipment Example
Think about journal entries
Cash
Accum Depr
65,000
60,000
Equip
Gain
Sale of equipment
Depr Exp
110,00
Accum. Depr
Year end Adj J/E for equip depr.
Equipment
200,000
Cash
L-T Note Payable
Equip Purchase
100,000
25,000
110,000
80,000
120,000
Financing Activities
Cash received from:
sale of stock
issuance of debt