Statement of Cash Flows Flashcards
What is the purpose of a statement of cash flows?
to provide information about the inflows and outflows of cash during a period
Cash inflows and outflows from operations fall under what category of activities?
operating activities
Cash inflows and outflows from acquisition and sale of investments and non-current assets fall under what category of activities?
investing activities
Cash inflows and outflows from non-current liabilities and equity fall under what category of activities?
financing activities
Cash from __________ activities is a likely recurring course for sustaining the company.
operating
Cash from __________ activities is a not likely to recur and poses the question of whether or not you’ll need to replace assets.
investing
Cash from __________ activities means a repayment will be required.
financing
Current assets and current liabilities are included in the _________ activities.
operating
Investments and long-term assets are included in the ___________ activities.
investing
Long-term debt and stockholders’ equity are included in the ___________ activities.
financing
What are the three components necessary to compile the operating activities section of the statement of cash flows?
- comparative (current and prior year) balance sheet
- current year income statement
- transaction data from general ledger
What are the steps for preparing the operating activities section under the INDIRECT METHOD?
- begin with net income
- add back non-cash expenses (depreciation, amortization, stock option)
- opposite things for sale of long-term assets and investments
- opposite things for current operating assets (accounts receivable, inventories, prepaid expenses)
- apply NORMALLY the current operating expenses (accounts payable, salaries payable, taxes payable)
The payment of long-term debt is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, financing
Payment for utilities is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, operating
Cash receipts from customers is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, operating
The sale of equipment for cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, investing
Payment of dividends with cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, financing
Purchases of land + buildings is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, investing
Cash receipt of interest is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, operating
Payment of interest is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, operating
The receipt of a bank loan is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, financing
Issuance of common stock is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, financing
What kind of activity / activities are cash INFLOWS for interest and dividends?
both operating
What kind of activity / activities are cash OUTFLOWS for interest and dividends?
interest – operating
dividends – financing
Cash receipts from customers for services rendered is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, operating
Sale of long-term investments for cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, investing
Acquisition of plant assets for cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, investing
Payment of income taxes is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, operating
Bonds payable issued for cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
inflow, financing
Payment of cash dividends declared in previous year is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, financing
Purchase of short-term assets (not cash equivalents) for cash is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, investing
Cash purchase of treasury stock is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, financing
Cash purchase of equipment is a cash (inflow/outflow) and a (operating/investing/financing) activity.
outflow, investing
Payment of long-term debt is a (operating/investing/financing) activity.
financing
Change in receivables is a (operating/investing/financing) activity.
operating
Depreciation and amortization is a (operating/investing/financing) activity.
operating
Change in prepaid expenses is a (operating/investing/financing) activity.
operating
Dividends paid is a (operating/investing/financing) activity.
financing
Stock-based compensation is a (operating/investing/financing) activity.
operating
Cash received from sales of assets and businesses is a (operating/investing/financing) activity.
investing
Net earnings is a (operating/investing/financing) activity.
operating
Change in accounts payable is a (operating/investing/financing) activity.
operating
Proceeds from common stock issued is a (operating/investing/financing) activity.
financing
Purchases of land, buildings and equipment is a (operating/investing/financing) activity.
investing
Paying interest is a (operating/investing/financing) activity.
operating
Receipts of interest is a (operating/investing/financing) activity.
operating
Receipts of dividends is a (operating/investing/financing) activity.
operating
Paying dividends is a (operating/investing/financing) activity.
financing
What are the supplemental disclosures needed for the statement of cash flows?
- cash paid for interest + income taxes
- all non cash investing + financing
- policy for determining cash equivalents
