Kế toán, kiểm toán - Chapter 13: Statement of Cash Flows
The Statement of Cash Flows helps users determine how a company obtains its cash and where the cash is spent. Providing this information helps explain changes in the cash balance from the beginning to the end of the period. While it is important for users to know how much cash a company has, it is also important to know how a company funded it operations. Did it have to borrow money or sell stock to help pay the operating expenses? If so, users need to be aware of this so they can fully assess the cash flow position of the company. Cash flow information is also useful in determining whether a business has sufficient cash to pay its debts, and/or if the business paid dividends during the period.
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Statement of Cash FlowsChapter 13Provides information about the cash receipts and cash payments of a business entity during the accounting period.Purpose of the Statement Helps investors with questions about the company’sAbility to generate positive cash flows.Ability to meet its obligations and to pay dividends.Reasons for difference between net income and net cash flows from operating activities.Need for external financing.Investing and financing transactions for the period. The Statement of Cash Flows must include the following three sections:Cash Flows from Operating ActivitiesCash Flows from Investing ActivitiesCash Flows from Financing ActivitiesClassification of Cash Flows+_Inflows from:Interest and dividends receivedSales to customersCash Flows from Operating Activities Operating ActivitiesOutflows to:Suppliers of merchandise and servicesEmployeesLenders for interestGovernments for taxesCash Flows from Investing Activities+_ Investing ActivitiesInflows from:Sale of investments and plant assetsCollection of principal on loansOutflows to:Purchase investments and plant assetsPurchase debt or equity investmentsMake loans+_ Financing ActivitiesInflows from:Short-term and long-term borrowingOwners (for example, from issuing stock)Outflows to:Make payments on borrowed fundsOwners for dividendsPurchase treasury stockCash Flows from Financing ActivitiesCash EquivalentsCashCurrencyShort-term, highly liquid investments.Readily convertible into cash.So near maturity that market value is unaffected by interest rate changes.Cash and Cash EquivalentsDirect Method: Cash Received from CustomersAccrual basis revenue includes sales that did not result in cash inflows.Can be computed as:Cash Received from CustomersDecrease in receivablesIncrease in receivables+– = = Net SalesNet IncomeCash Flows from Operating ActivitiesReporting Operating Cash Flows by the Indirect MethodChanges in current assets and current liabilities as shown on the following table+ Losses and - Gains+ Noncash expenses such as depreciation and amortizationUse this table when adjusting Net Income to Operating Cash Flows.Reconciling Net Income with Net Cash FlowsManaging Cash FlowsIncrease collection of accounts receivables.Keep inventory low.Delay payment of liabilities.Plan timing of major expenditures.Invest idle cash.End of Chapter 13
