AccountingBasics英语会计基础教学PPT教学课件

1、STATEMENT OF CASH FLOWS:USEFULNESS AND FORMAT A statement of cash flows provides information about an entitys cash receipts and cash payments during a period It answers the questions: Where did the cash come from during the period? What was the cash used for during the period? What was the change in

2、 the cash balance during the period?1LO1第1页/共44页Usefulness of the statement of cash flows Helps investors, creditors and other interested parties to evaluate the following about the entity: Ability to generate future cash flows Ability to pay dividends and meet obligations Reasons for difference bet

3、ween profit and net cash provided (used) by operating activities Cash investing and financing transactions for the period2第2页/共44页Classification of cash flows Operating activities Cash effects of transactions that create income and expenses Investing activities Cash effects resulting from acquisitio

4、n and disposal of long-term assets Financing activities Cash effects resulting from long-term borrowing and shareholders equity3LO2第3页/共44页Operating activitiesAre transactions involving the acquisition or production of goods and services and the sale and distribution of these goods and services to c

5、ustomers. Current asset and current liability transactions normally result from the operating activities of a company, such as buying and selling merchandise.4第4页/共44页The acquisition/disposal of long-term assets and other investments during a financial period. Examples include:Cash inflows fromCash

6、outflows toSale of non-current assets (PP&E, intangibles, share investments)Acquire non-current assets (PP&E, intangibles, share investments)Repayments of loans advanced to other partiesLend money to other partiesInvesting activities第5页/共44页 Transactions between a company and its owners or between a

7、 company and its long-term creditors. Examples include:Cash inflows fromCash outflows toIssuing shares and other equity instrumentsIssuing bonds and other borrowingsBuy back sharesRepay bonds and other borrowingsPay dividends (cash dividend)Financing activities第6页/共44页Significant non-cash activities

8、 Significant financing and investing activities that do not affect cash are not reported in the body of the statement of cash flows, but are disclosed elsewhere in the financial statement Examples include Issue of shares to purchase assets Conversion of bonds into shares Issue of debt to purchase as

9、sets Exchanges of PPE assets7第7页/共44页Format of the statement of cash flows8Cash flows from operating activities(List of individual items)xxNet cash from (used by) operating activitiesxxxCash flows from investing activities(List of individual inflows and outflows) xxNet cash from (used by) investing

10、activitiesxxxCash flows from financing activities(List of individual inflows and outflows) xxNet cash from (used by) financing activitiesxxxNet increase (decrease) in cashxxxCash at beginning of periodxxxCash at end of periodxxxListed elsewhere in the financial statementMaterial non-cash investing a

11、nd financing activities(List of individual non-cash transactions)xxxCOMPANY NAMEStatement of Cash FlowsPeriod covered 第8页/共44页Preparing the statement of cash flowsThere are 3 sources of information to prepare the statement of cash flows:1 Comparative statements of financial position2 Current income

12、statement3 Additional information (about transactions that occurred during the period)9第9页/共44页The following information has been provided on the following slides in relation to A Ltd for the year ending 30 June 2011:nStatement of comprehensive incomenStatement of financial positionnAdditional infor

13、mationRequired:Prepare the statement of cash flows of A Ltd for the year ending 30 June 2011 (using the direct method of disclosure for cash flows from operating activities)Preparing the statement of cash flows- Example第10页/共44页A Ltd Statement of Comprehensive Income for the year ending 30 June 2011

14、Sales revenue520,000Interest revenue4,300Gain on sale of plant & equipment2,500TOTAL REVENUE527,500Cost of goods sold276,300Depreciation plant & equipment38,500Other expenses135,000TOTAL EXPENSES450,500PROFIT BEFORE TAX77,000Income tax expense52,500PROFIT FOR THE YEAR24,500第11页/共44页A Ltd comparative

15、 Statements of Financial Position20102011Cash at bank152,0003,000Accounts receivable97,500180,000Inventory182,500305,500Prepayments8,0009,500Interest receivable1,0001,500Plant & equipment207,000300,000Accum. Depreciation PP&E(27,000)(55,500)Total assets621,000744,000第12页/共44页A Ltd comparative Statem

16、ent of Financial Position20102011Bond payable120,00036,700Accounts payable36,20029,300Other payables3,0001,800Current tax liability43,50053,400Dividend payable20,00015,000Share capital250,000450,000Retained earnings148,300157,800Total liabilities & equity621,000744,000第13页/共44页Additional Information

17、 Plant & equipment that had originally cost $55,000 and had been depreciated by $10,000 was sold during the year. During 2010-2011 A Ltd issued shares for cash.第14页/共44页Direct and indirect methods Operating activities are reported using two methods: direct and indirect The international accounting s

18、tandard on cash flows allows entities to choose either method If an Australian entity chooses the direct method, a reconciliation of net cash flows from operating activities to profit must be disclosed in the notes to the financial statements15第15页/共44页161. The direct method cash inflows less cash o

19、utflows = net cash inflow/(outflow). 2. The indirect method where the accrual-based net profit is converted into cash amounts by adjusting for non-cash items and by analysing the movements in various accounts to establish the cash amount.Direct and indirect methods第16页/共44页STATEMENT OF CASH FLOWS DI

20、RECT METHODThere are 3 steps in the preparation:1 Operating activities Determine net cash provided/used by operating activities by converting from cash to accrual basis2 Investing and financing activities Analyse changes in non-cash assets and liabilities3 Net change in cash Compare net change in ca

21、sh in statement of cash flows with change on the statement of financial position17LO3第17页/共44页Step 1: Operating activities18第18页/共44页Step 1: Operating activities Cash receipts from customers Sales revenue reflects sales made by the entity during the year irrespective of whether the customers have pa

22、id for the sale Cash received in the current year includes sales made in the prior year that are not collected until the current year and excludes sales made in the current year where the cash will be received in a future year Therefore the cash flows are determined with reference to the movement in

23、 Accounts Receivable 19第19页/共44页Step 1: Operating activities Cash receipts from customers Use sales and comparative accounts receivable account balances Formula to calculate cash receipts from customers:20Cash receipts Sales + Decrease in accounts receivable from = Revenue or customers Increase in a

24、ccount receivable第20页/共44页Step 1: Operating activities Cash receipts from customers21Accounts Receivable Opening Balance Cash Receipts from Sales Revenue customers Closing BalanceCash receipts = Opening Balance + Sales Revenue - from customers Closing Balance第21页/共44页Step 1: Operating activities con

25、tinued Cash payments to suppliers Reflects payments made during the year for: Inventory purchases All other supplies and services purchasedIncludes: Payments for prior year purchases Current year (pre)payments that will be expensed in future years Excludes: Current year purchases where the cash will

26、 be paid in a future year Expenses recognised in the current year that were (pre)paid in prior years22第22页/共44页Step 1: Operating activities continued Cash payments to suppliers Use cost of sales and comparative accounts payable and inventory Two steps: calculate amount of purchases made during perio

27、d, then the amount of cash paid to suppliers for purchases23 Cash Cost of + Increase in inventory + Decrease inpayments = goods oraccounts payableto suppliers sold Decrease in inventory or Increase in accounts payable 第23页/共44页Inventory Opening Balance Cost of salesPurchases Closing BalanceStep 1: O

28、perating activities continued Cash payments to suppliers24Accounts Payable Payment to Opening Balance Suppliers Purchases Closing Balance第24页/共44页Step 1: Operating activities continued Cash payments for expenses Use various expense accounts and comparative prepaid expense accounts and accrued expens

29、e accounts Two steps: calculate changes to prepaid expenses, then the amount of cash paid for expenses25 + Increase in prepaid + Decrease in Cash expenses accrued expenses payments for = Expenses orpayable expenses or Decrease in prepaid Increase in expenses accrued expenses payable 第25页/共44页 Cash p

30、ayments for expensesPrepaid Accounts Opening Balance Prepaid Expenses Cash Payment Closing BalanceStep 1: Operating activities continued26Accrued Payable Opening Balance Cash Payment Accrued Expenses Closing Balance第26页/共44页Step 1: Operating activities continued Depreciation expense and loss on sale

31、 of equipment Expenses are shown exclusive of depreciation because it is a non-cash expense Loss on sale of equipment reduces profit, but does not reduce cash and is therefore is not reported on statement of cash flows27第27页/共44页Step 1: Operating activities continued Cash payments for income taxes U

32、se income tax expense and comparative tax payable balances28 Cash + Decrease in income taxespayments for = Income tax payableIncome taxes expense or Increase in income taxes payable第28页/共44页Step 1: Operating activities Cash payments for income taxes29Income Tax Payable Cash Payment for Opening Balan

33、ce Income tax Income Tax Expense Closing BalanceCash payment = Opening Balance + Income Tax for income taxes Expense - Closing Balance第29页/共44页Step 2: Investing activities30 This step involves analysing balance sheet data and income statement data and selected additional information for the effects

34、of cash Transactions relating to non-current assets: property, plant and equipment loans to other entities Non-cash transactions are not included第30页/共44页Step 2: Investing activities Increase in land If ordinary shares are issued to purchase land, this will be significant non-cash transaction Increa

35、se and decrease in equipment Use depreciation expense, loss or gain on sale, and comparative equipment and accumulated depreciation accounts, plus additional information Check comparative balances from balance sheet for amounts not accounted for31第31页/共44页Step 2: Investing activities Increase and de

36、crease in equipment32Equipment Opening Balance Cost of equipment Additional Purchase Sold Closing BalanceAccumulated Depreciation Opening Balance Sale of Equipment Depreciation Expense Closing Balance第32页/共44页Step 2: Financing activities This step involves analysing comparative balance sheet data an

37、d selected additional information for the effects of cash Relates to debt and equity of company Use net profit and notes payable, issued shares and retained profit accounts33第33页/共44页Step 2: Financing activities Bonds payable Cash inflow = cash received from issue of bonds Cash outflow = cash paid u

38、pon payment of bonds Check additional information for details (e.g. non-cash transactions that are not included in statement)34第34页/共44页Step 2: Financing activities Increase in ordinary shares Check additional information for details If none, assume increase/decrease represents cash received/paid If

39、 non-cash transaction, check that details account for changes to issued share balances Retained earnings Profit not reported in statement of cash flows Declaration and payment of cash or share dividend35第35页/共44页Step 3: Net change in cash Compare the net change in cash on the statement of cash flows

40、 with the change in the cash account reported on the statement of financial position to make sure they agree36第36页/共44页EXAMPLE SOLUTIONA Ltd statement of cash flow for the year ending 30 June 201137第37页/共44页A Ltd Statement of Cash Flows for the year ending 30 June 2011Cash flows from operating activ

41、itiesReceipts from customers437,500Cash payments: to suppliers406,200 for other expenses137,700 for income taxes42,600586,500Interest received3,800Net cash used by operating activities(145,200)Cash flows from investing activitiesPayments for plant & equipment148,000Proceeds on sale of plant & equipm

42、ent47,500Net cash used by investing activities(100,500)Continued on following slide第38页/共44页A Ltd Statement of Cash Flow for the year ending 30 June 2011Cash flows from financing activitiesRepayment of Bonds 83,300Proceeds from share issue200,000Dividends paid20,000Net cash flows from financing activities96,700Net decrease in cash (149,000)Cash