Chapter 16 Flashcards
Statement of cashflows
report of cash receipts and payments for a period
purpose of cashflows
predict future cash flows, evaluate management, predict ability to pay debts/dividends
Operating activities
activities that create revenues and expenses
interest revenue/expenses, tax expenses, and dividend income/payments are all
Operating activities
Investing Activities
activities that increase or decrease long term assets
Gains/losses on sale of PPE, lending and collection of notes receivable, are both
investing activities
financing activities
activities that increase or decrease long term liabilities and equity
issuing stock is a
financing activity
paying dividends is a
financing activity and operating activity
buying and selling treasury stock is
financing activity
loans and loan payments are
financing activity
purchase of equipment forlong term note payable, equipment received in exchange for stock are
Noncash investing and financing activities
Noncash investing and financing activities ____ included on the statement of cash flows
are not
indirect method/direct method
a format of operating activities section of the statement of cashflows.
using the indirect method net ____ reconciles to net ____ provided by operating activities
income; cash
using the direct method lists the operating cash ____ and _____
receipts; payments
direct and indirect methods use ____ computations and yield _____ amount of net ____ _____
different; same; cash flow
direct and indirect methods list investing and financing activities in _____ ways
the same
most companies use the _____ on their statement of cashflows
indirect
to prepare the statement of cash flows you need the current year _____ ____ as well as the _____ _____ from the current and prior years
income statement; balance sheets
using the indirect method, the ___ _____ is the first line on the statement of cashflows
net income
cash flows are ____ basis
cash
net income is ____ basis
accrual
additions and subtractions to net income are called
adjustments to reconcile net income to net cash provided by operating activities
adjustments include ____ _____ expenses; such as ______ and ______
non cash; depreciation; amortization
non cash expenses are ___ to net income
added
gains and losses on the sale of PPE are already included in ____ _____ and should be ____ from ___ ___ so the entire receipt of cash can be included from the sale can be included in the ____ activities section
net income; removed; net income; investing
gains on PPE are ____ and losses on PPE are _____ to net income
subtracted; added
an _____ in a current asset other than cash causes a decrease adjustment to ___ ____
increase; net income
an _____ in a current asset other than cash causes a increase adjustment to ___ ____
decrease; net income
an ____ in a current liability causes an increase adjustment to ____ ______
increase;net income
an ____ in a current liability causes an decrease adjustment to ____ ______
decrease;net income
net income + net cash inflow=
net cash PROVIDED by operating activities
net income - net cash outflow=
Net cash USED for operating activities
investing activities affect ____ _____ assets
long term
financing activities affect ____ & ______ accounts
liability; equity
to report dividends on the statement of cash flows they must be ____ ___
paid out
stock dividends do not involve cash so they ___ reported on the financing section of the statement of cash flows
not reported
Net increase/decrease in cash is the sum ofcash ___ or ___ by ____ ____ ____
used; provided; operating, investing, financing activities
Begining cash +/- increase/decrease in cash for period, = ____ ___
cash balance
free cash flow
amount of cash available from operating activities after paying for planned investments in long term assets, and after paying dividends to shareholders.
net cash provided by operating activities - cash payments for planned investments in long term assets- cash dividends=
free cash flow
free cash flow is used to estimate the amount of cash ___ for unexpected opportunities
available
the FASB prefers the _____ method of reporting cash flows
direct
Direct method includes all cash received and paid but not _____ and ____
receivable ; payable
to record cash receipts using the direct method, you must add net ___ ____ and beginning ____ ___, and subtract ending ____ ____
sales revenue;AR;AR
direct method activities are reported as actually ____/____
paid/received
COGS on the direct method statement of cash flows equals COGS minus Beginning _____ ____+ ending _____ _____+ beginning ____ ____- ending _____ ____
merchandise inventory;merchandise inventory;AP;AP
non cash expenses and gains or losses on disposal of long term assets ______ reported on the _____ statement but are ____ ____ in the operating activities when using the _____ Method
are; income;not included; direct
To find the net cash provided by operating activities using the direct method, we _____ all the cash receipts and ____ all the cash payments. The difference is the Net cash.
add;subtract
