The CASH FLOW Statement(Statement of changes in financial

position)Text Chapter 18, Pages 820-842, 854-857Practice Questions:1. BE18-1, BE18-2, BE18-3, E18-1, E18-22. BE18-4, Be18-5, BE18-6, E18-3, E18-4, E18-53. BE18-11, E18-10, E18-11

Financial Statements (read p.820)

What does the BS show users?

What does the IS show users?

But referring to the loss of W49 what is the problem with the IS?

PURPOSE OF THE PURPOSE OF THE CASH FLOW STATEMENTCASH FLOW STATEMENT

PURPOSE OF THE PURPOSE OF THE CASH FLOW STATEMENTCASH FLOW STATEMENT

• provide information about the cash receipts and cash payments during a fiscal period.

• A secondary objective is to provide information about its1.

2.

3.

CASH FLOW STATEMENTCASH FLOW STATEMENT

TRACKS THE CASH (and cash equivalents – see p. 823) OF THE BUSINESS.

If it does not affect cash, do ____ report in body of cash flow statement

Report in ______________ to the financial statements

• Include– Cash effects of transactions that create

revenues and expenses and– Enter into determination of net income

(loss)

Cash Flow Part 1 (p.823) OPERATING ACTIVITIES

• Include– Purchasing and disposing of

investments and productive long-lived assets using cash and

– Lending money and collecting the loans

Cash Flow Part 2 (p.823) : INVESTING ACTIVITIES

• Include– Obtaining cash from issuing debt and

repaying the amounts borrowed and – Obtaining cash from

owners/shareholders and paying them drawings/dividends

Cash Flow Part 3 (p.823) : FINANCING ACTIVITIES

PREPARING PREPARING THE CASH FLOW STATEMENTTHE CASH FLOW STATEMENT

PREPARING PREPARING THE CASH FLOW STATEMENTTHE CASH FLOW STATEMENT

It is ____ prepared from the adjusted trial balance.

The cash flow statement deals with cash receipts and payments, so the ____________ ____________________

p.826”accounting in action”: Where did the money go?

Three sources of information:1. 2. 3.

Two Methods indirect (most common) & direct

18-3- 18-3- THREE MAJOR STEPS IN PREPARING THREE MAJOR STEPS IN PREPARING THE CASH FLOW STATEMENTTHE CASH FLOW STATEMENT

18-3- 18-3- THREE MAJOR STEPS IN PREPARING THREE MAJOR STEPS IN PREPARING THE CASH FLOW STATEMENTTHE CASH FLOW STATEMENT

+ or -The difference between the beginning and ending cash balances can be easily calculated from comparative balance sheets.

The difference between the beginning and ending cash balances can be easily calculated from comparative balance sheets.

This step involves analysing not only the current year’s income statement but also comparative balance sheets and selected additional data.

This step involves analysing not only the current year’s income statement but also comparative balance sheets and selected additional data.

XYZ Goods

This step involves analysing comparative balance sheet data and selected additional information for their effects on cash.

This step involves analysing comparative balance sheet data and selected additional information for their effects on cash.

For Sale Investing Financing

Step 1: Determine the net increase (decrease) in cash.

Step 2: Determine net cash provided (used) by operating activities.

Step 3: Determine net cash provided (used) by investing and financing activities.

Page 828 Do It #1-5,