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Cash
Currency
Short-term, highly liquid investments. Readily convertible into cash. So near maturity that market value is unaffected by interest rate changes.
Operating Activities
Inflows
Receipts from customers. Cash receipts from royalties, fees, commissions and other revenue. Other.
Outflows
Investing Activities
Inflows
acquire fixed assets to acquire shares, warrants or debt instruments of other enterprises and interest in joint ventures
Financing Activities
Inflows
Issuing its own equity securities. Issuing bonds and notes. Issuing short-term and long-term liabilities. Outflows
Dividend/ Interest paid Buy back of Shares Redemption of Preference Shares Redemption of Debentures Payment of Loan.
Exh. 12.4
Exh. 12.5
Company Name Statement of Cash Flows Covered Period Cash flows from operating activities: [List of individual inflows and outflows] Net cash provided (used) by operating activites Cash flows from investing activities: [List of individual inflows and outflows] Net cash provided (used) by investing activites Cash flows from financing activities: [List of individual inflows and outflows] Net cash provided (used) by financing activites Net increase (decrease) in cash Cash (and equivalents) balance at beginning of period Cash (and equivalents) balance at end of period
$ #####
#####
Exh. 12.5
Company Name Statement of Cash Flows Covered Period Cash flows from operating activities: [List of individual inflows and outflows] Net cash provided (used) by operating activites $ ##### Cash flows from investing activities: There are two acceptable methods to determine Cash [List of individual inflows and outflows] Flows from Operating Activities: Net cash provided (used) by investing activites ##### Cash flows from financing activities: Direct Method [List of individual inflows and outflows] Indirect Method Net cash provided (used) by financing activites ##### Net increase (decrease) in cash $ ##### Cash (and equivalents) balance at beginning of period ##### Cash (and equivalents) balance at end of period $ #####
Lets look at the Direct Method for preparing the Cash Flows from Operating Activities section.
Exh. 12.12
Exh. 12.13
Step 2
Cash paid for merchandise
= Purchases
Exh. 12.14
+ Increase in
prepaid expenses
- Decrease in
prepaid expenses
+ Decrease in
accrued liabilities
- Increase in
accrued liabilities
Exh. 12.15
Taxes
Cash paid for taxes Tax = Expense
Lets look at the Indirect Method for preparing the Cash Flows from Operating Activities section.
Net Income
+ Losses and - Gains + Noncash expenses such as depreciation and amortization.
Use this table when adjusting Net Income to Operating Cash Flows.
Add noncash expenses such as depreciation, depletion, amortization, or bad debt expense.
If we used the Direct Method, we would get the same $140,000 for Cash Provided by Operating Activities.
End of Chapter 12