Sources and Uses Statement Flashcards
What is the purpose of a S&U statement?
Provide information about the cash receipts and cash payments of an entity during a period of time
See how the financial position changes during an accounting period
Where does the information for the S&U statement come from?
Income statement and balance sheet
S&U statement is the only statement?
That collects and shows in one place the causes of changes in cash during a financial reporting period
Problem with Income Statement and Balance sheets compared to S&U statement?
They are based on the accrual basis so not recorded when the money is received but when it happens
S&U statement provides info about what our actual source and uses of cash are
S&U statement Development Rules
Changes are calculated only for accounts
Only change needed for fixed assets is the change in NET fixed assets
Each is classified as either a source or a use
Define Source of Cash
Decrease in asset accounts and increases in liabilities or owner’s equity
Define Uses of Cash
Increase in assets and decrease in liabilities or owner’s equity
If you are holding more money then it is a?
Source
Increase in inventory?
Use of cash
Decrease in notes payable?
Use of cash; paid it down
Borrowed money form the bank?
Source of cash
Increase amounts payable?
Source of cash
Increase owner’s equity
Source of cash
Marketable security
Use of cash
Accounts receivable
Use of cash
Prepaid expense
Use of cash
Three changes to balance sheet statements?
- Change in the owner’s equity account is examined to see how it occurred (increase in net income = increase OE by full amount)
- Converts accrual based income to cash generated from operation of the pharmacy (depreciation is not a source of cash, so it shouldn’t be included)
- Estimate the amount of cash spent on fixed assets for the year
Estimate the amount of cash spent on fixed assets for the year really means?
You would subtract what our depreciation was from the total amount the next assets dropped and that will tell us what we spent on something new (long-term asset)
Depreciation is a source or use of cash?
Use the total cost of depreciation as a source but the expenditure on that as as use
Long term vs short term use?
Long term = less likely to get it back
Short term = you can get that money back
Define Short Term Source of Cash
Increase in liability and decrease in current assets
Define Short Term Use of Cash
Increase in current assets or decrease in current liabilities
Define Long term Sources of cash
Net income plus depreciation, owner’s investment, increase in long-term debit, and net cash from sale of fixed assets
Define Long term Uses of cash
Owner withdraws
Decrease in long-term debt
Expenditures on fixed assets
