会计英语(简明版) Lesson 10 Statement of Cash Flows

method or the indirect financing activities: method.
9
Direct Method
Let’s look at the Direct Method for preparing the Statement of Cash Flows.
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+
Revenue, Accrual basis $800,000
Decrease in receivables
=
Revenue, Cash basis
–
Increase in receivables
=
12
YE SUN AccountingEnglish@2009
Direct Method Cash Received from Customers The A/R balance was $40,000 on 1/1/99 and $52,000 on 12/31/99. If accrual sales revenue for 1999 was $800,000, what was cash basis revenue?
Lesson 10
Statement of Cash Flows
YE SUN AccountingEnglish@2009
1
Cash and Cash Equivalents
Cash Equivalents
Cash
Currency



Short-term, highly liquid investments. Readily convertible into cash. So near maturity that market value is unaffected by interest rate changes.
=
Revenue, Cash basis
Revenue, Accrual basis
–
Increase in receivables
=
11
YE SUN AccountingEnglish@2009
Direct Method Cash Received from Customers The A/R balance was $40,000 on 1/1/99 and $52,000 on 12/31/99. If accrual sales revenue for 1999 was $800,000, what was cash basis revenue?
$ #####
#####
##### $ #####
Cash (and equivalents) balance at beginning of period ##### Cash (and equivalents) balance at end of period $ #####
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Acquire plant assets. Purchase debt or equity investments. Make loans.
_
Cash Flows from Investing Activities
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Financing Activities
Dividends Dividends = Received Revenue
{
+ Decrease in dividends receivable - Increase in dividends receivable
15
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Direct Method Cash Paid for Merchandise Step 1
Inventory, 1/1/99 Inventory, 12/31/99 COGS, 12/31/99 $ 130,000 $ 165,000 $ 900,000 A/P, 1/1/99 A/P, 12/31/99 $ 23,000 $ 35,000
a. b. c. d.
$900,000 $923,000 $947,000 $877,000
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Direct Method Cash Paid for Merchandise
How much did Lug Lite pay for inventory in 1999?
Inflows from:

Short-term and long-term borrowing. Owners (for example, from issuing stock).
+
Outflows to:



Repayments of borrowed funds. Owners for dividends. Purchase treasury stock.

Ability to generate positive cash flows. Ability to meet its obligations and to pay dividends. Need for external financing. Investing and financing transactions for the period.
Direct Method Cash Paid for Merchandise
How much did Lug Lite pay for inventory in 1999?
Inventory, 1/1/99 Inventory, 12/31/99 COGS, 12/31/99 $ 130,000 $ 165,000 $ 900,000 A/P, 1/1/99 A/P, 12/31/99 $ 23,000 $ 35,000
$ #####
Cash flows from investing activities: The operating cash flows [List of individual inflows and outflows] section can be prepared either the direct Net cash provided (used) byusing investing activities ##### Cash flows from YE SUN AccountingEnglish@2009 [List of individual inflows and outflows]
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Investing Activities
Inflows from:

Selling investments or plant assets. Collecting of principal on loans.
+
Outflows to:
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Purpose of the Statement of Cash Flows
Provides information about the cash receipts and cash payments of a business entity during the accounting period. Helps investors with questions about the company’s:
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Company Name Statement of Cash Flows Period Covered Cash flows from operating activities: [List of individual inflows and outflows] Net cash provided (used) by operating activities Cash flows from investing activities: [List of individual inflows and outflows] Net cash provided (used) by investing activities Cash flows from financing activities: [List ofຫໍສະໝຸດ Baiduindividual inflows and outflows] Net cash provided (used) by financing activities Net increase (decrease) in Cash
Purchases = COGS
{
+ Increase in inventory - Decrease in inventory
Step 2
Cash paid for merchandise = Purchases
{
+ Decrease in A/P - Increase in A/P
16
YE SUN AccountingEnglish@2009
+
Revenue, Accrual basis$800,000
Decrease in receivables
=
Revenue, Cash basis $788,000
–
$12,000 Increase in receivables
=
13
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Now that we understand the process, let’s look at some simplified formulas for computing direct method cash flows.
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Direct Method Interest and Dividends Received
Interest Received Interest = Revenue
{
+ Decrease in interest receivable - Increase in interest receivable
Classification of Cash Flows
The Statement of Cash Flows must include the following three sections: Cash Flows from Operating Activities Cash Flows from Investing Activities Cash Flows from Financing Activities
Direct Method Cash Received from Customers


Accrual basis revenue includes sales that did not result in cash inflows. Can be computed as: +
Decrease in receivables
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Operating Activities
Inflows from:

Sales to customers.
Outflows to:



Suppliers of merchandise and services. Employees. Lenders for interest. Governments for taxes.
_
Cash Flows from Financing Activities
8
YE SUN AccountingEnglish@2009
Company Name Statement of Cash Flows Period Covered Cash flows from operating activities: [List of individual inflows and outflows] Net cash provided (used) by operating activities