Академический Документы
Профессиональный Документы
Культура Документы
(30) (62)
Sources of Cash
Assets
The Sales of an asset resulting in cash
Liabilities
An increase in borrowed money results in new cash.
Owners Equity
Investment of cash by owners or The sale of stock results in new cash.
Operations
Selling goods or services for a Profit resulting in cash A decrease in Inventory resulting in cash A decrease in Accounts Receivable provides cash. Depreciation of assets (a non-cash transaction) must be added back to reverse the reduction of Net Income.
Uses of Cash
Assets
Purchase of equipment, property or other assets.
Liabilities
Payment of loans and Accounts Payable
Owners Equity
Repurchase of stock Payment of dividends Withdrawal of cash or other assets by owners
Operations
Purchase of inventory, supplies and other operating expenses will decrease cash. An increase in Accounts Receivable consumes additional cash. Business losses consume cash.
Indirect Method:
Changes in Current Assets, Current Liabilities and Net Income converts from Accrual accounting to Cash-basis accounting.
Cash Flows from Investing and Financing Activities are the same for both methods.
Increase Decrease
Source Source (Use) (Use) Source Source (Use) Source Source (Use) (Use)
Increase Decrease
(Use) (Use) Source Source
Increase Decrease
(Use)
Balance Sheet Source Statement of Retained (Use) Earnings or footnotes Balance Sheet Source
(Use)
Retained Earnings, November 30, 2006 Add: net income Subtract: dividends paid Retained Earnings, December 31, 2006
Assessment
The Cash Flow Statement shows _______ of cash and ________ of cash. The format for the Cash Flow Statement categorizes cash flows into what three areas? Which financial statement provides most of the data for the Cash Flow Statement? What two items found on the Income Statement are typically used for the Cash Flow Statement?