tailieunhanh - Lecture Introduction to Accounting: An integrated approach: Chapter 19 - Penne Ainsworth, Dan Deines

Chapter 19 - Company performance: Cash flows . In this chapter, the learning objectives are: Explain the purpose of and prepare the operating section of the statement of cash flows using the indirect method, identify the purpose of and prepare the investing section of the statement of cash flows, explain the purpose of and prepare the financing section of the statement of cash flows, describe the purpose of other cash flow statement disclosures and the calculation of cash flow per share. | Chapter 19 Company Performance: Cash Flows Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 19- Why Do We Need a Statement of Cash Flows? Assess ability to generate future cash Assess ability to meet obligations and pay dividends Understand the difference between net income and cash flows Understand cash and noncash investing and financing activities 19- What are the Sections of the Statement of Cash Flows? Operating activities Relating revenues and expenses to current, operating assets and current, operating liabilities Investing activities Buying and selling long-term and other investment assets Financing activities Issuing and retiring long-term and other financing liabilities and owners’ equity 19- How Do We Determine Operating Cash Flows—Direct? Revenues versus cash inflows Analyze current, operating assets and current, operating liabilities related to revenues to determine cash inflows Expenses versus cash outflows Analyze current, operating assets and current, operating liabilities related to expenses to determine cash outflows Revenues and cash inflows If a revenue does not have a related balance sheet account, we assume the revenue was received in cash Expenses and cash outflows If an expense (excluding noncash expenses) does not have a related balance sheet account, we assume the expense was paid in cash 19- How Do We Determine Operating Cash Flows—Indirect? Adjust net income for noncash expenses Add back depreciation, amortization, and depletion expense Adjust net income for nonoperating items Add back losses Subtract out gains Adjust net income for changes in current, operating accounts 19- How Do We Adjust Net Income for Changes in Current, Operating Accounts? Changes in current, operating assets If the asset increases, subtract the change If the asset decreases, add the change Changes in current, operating liabilities If the liability increases, add the change If the liability decreases, . | Chapter 19 Company Performance: Cash Flows Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 19- Why Do We Need a Statement of Cash Flows? Assess ability to generate future cash Assess ability to meet obligations and pay dividends Understand the difference between net income and cash flows Understand cash and noncash investing and financing activities 19- What are the Sections of the Statement of Cash Flows? Operating activities Relating revenues and expenses to current, operating assets and current, operating liabilities Investing activities Buying and selling long-term and other investment assets Financing activities Issuing and retiring long-term and other financing liabilities and owners’ equity 19- How Do We Determine Operating Cash Flows—Direct? Revenues versus cash inflows Analyze current, operating assets and current, operating liabilities related to revenues to determine cash inflows Expenses versus cash outflows Analyze .