MIDTERM Flashcards
tells a specific story about the owner’s stake in the company.
STATEMENT OF CHANGES IN OWNER’S EQUITY
Elements of Changes in Owner’s Equity
Statement Heading
Beginning Capital
Additional Investment
Net Income
Drawing
Ending Capital
opening balance; ending capital balance of the previous year’s Statement of Changes in Owner’s Equity
Beginning Capital
any capital infusion made by the owner for the year.
Additional Investment
the amount earned by the business for the year, taken from the Statement of Comprehensive Income.
Net Income
represents the owner’s return of investment; occurs when funds are removed from the owner’s account.
Drawing
what the owner actually owns; ending capital balance of the current year’s Statement of Changes in Owner’s
Equity.
Ending Capital
reports the changes in company equity
Statement of Changes in Owner’s Equity
the amount of capital invested or owned by the owner of a company.
Equity
What is the formula for Total Ending Capital
Beginning Capital
+ Additional Investment
+ Net Income
Total
- Withdrawal
- Net Loss
represents the sources utilization of an organization’s cash and cash equivalent
Statement of Cash Flows
useful in predicting future cash outflows and inflows of the organization.
Statement of Cash Flows
what are the three major sections of SCF
Operating Activities
Investing Activities
Financing Activities
base-line cash activities of the entity related to its normal operating cycle.
Operating Expense
related to the primary revenue-producing activity of the entity
Operating Expenses
What are the activities under Operating Expense?
+ Cash Receipts From Sales of Goods and Rendering Services
+ Cash Receipts from royalties, fees, commissions, and other revenue
- Cash Payments to suppliers of goods and services
- Cash Payment to employees
- Cash Payment to Income Taxes
- Interest Paid
+ Interest Received
+ Dividends Received
+ Cash Receipts From Sales of Goods and Rendering Services
Operating Expense
+ Cash Receipts from royalties, fees, commissions and other revenue
Operating Expense
- Cash Payments to suppliers of goods and services
Operating Expense
- Cash Payment to employees
Operating Expense
- Cash Payment to Income Taxes
Operating Expense
- Interest Paid
Operating Expense
+ Interest Received
Operating Expense
+ Dividends Received
Operating expense
result from acquisition and disposal of non-current assets.
Investing Activities
What are the activities under Investing Activities?
- Cash Payments to acquire property, plant and equipment (PPE)
- Cash Payments to acquire intangible assets
+ Cash receipts from sale of property, plant and equipment
+ Cash receipts from sale of intangible assets
+ Cash receipts from sale of their long-term assets
- Cash Payments to acquire property, plant and equipment (PPE)
Investing Activities
- Cash Payments to acquire intangible assets
Investing Activities
+ Cash receipts from sale of property, plant and equipment
Investing Activities
+ Cash receipts from sale of intangible assets
Investing Activities
+ Cash receipts from sale of their long-term assets
Investing Activities
arise from changes in non-current liabilities and owner’s equity of a business organization.
Financing Activities
What are the activities in the financing activities?
➕ Cash Investments from owners
➕ Cash proceeds from bank loans
➖Cash distributions to owners
➖ Repayment of Bank Loans
+ Cash Investments from owners
Financing Activities
+ Cash proceeds from bank loans
Financing Activities
- Cash distributions to owners
Financing Activities
- Repayment of Bank Loans
Financing Activities
Rule Decisions in Determining Classification of Cash Transaction
- Operating: Profit or Loss
- Investing: Non-current Assets
- Financing: Equity and Non-current Liabilities
Key Features of Statement of Cash Flow
Statement Heading
Cash Flow from operating activities
Cash Flow from Investing Activities
Cash Flow from Financing Activities
Net Increase/Decrease
Beginning Cash Balance,
Ending cash Balance
date format for Changes in Owner’s Equity
For the year ended + date
date format for Cash flow
For the period ended + date
Total cash flows from the three activities.
Net Increase/Decrease
cash at the beginning of the current period
Beginning Cash Balance
amount of cash at the end of the current year or period
Ending Cash balance
What is the formula for Net Cash from Operating
total cash inflow - total cash outflow from the operating expense
Formula for Net Cash Flows from Investing Activities
Total Cash Inflows minus - Total Cash Outflows from Investing Activities
Formula for Net Increase/Decrease in cash
Net Cash Flows from Operating Activities
+ Net Cash Flows from IA
+ Net Cash Flows from FA
Formula for the beginning Cash for the year
Ending Cash Balance of the previous year / Opening Cash Balance
Formula for Ending Cash for the year
Net Increase/Decrease + Beginning Cash for the year
Formula for Net Cash Flows from Financing Activities
Total Cash inflow -Total Cash outflows from Financing Activities
