大三下学习大二上

1、Statement of Cash Flows15Learning Objective 13-1Describe the nature of the adjusting process.Learning Objective 13-1Describe the nature of the adjusting process.Insert Chapter ObjectivesStatement of Cash Flows1Describe the cash flow activities reported in the statement of cash flows.2Prepare a state

2、ment of cash flows, using the indirect method.After studying this chapter, you should be able to:16-23Prepare a statement of cash flows, using the direct method.16-31Describe the cash flow activities reported in the statement of cash flowsThe statement of cash flows reports a firms major cash inflow

3、s and outflows for a period. It provides useful information about a companys ability to do the following:Generate cash from operationsMaintain and expand its operating capacityMeet its financial obligationsPay dividends1Reporting Cash FlowsThe statement of cash flows reports cash flows from three ty

4、pes of activities:1.Cash flows from operating activities are cash flows from transactions that affect net e.2.Cash flows from investing activities are cash flows from transactions that affect the investments in noncurrent assets of the company.3.Cash flows from financing activities are cash flows fr

5、om transactions that affect the equity and debt of the company.1Cash Flows1Exhibit 1Cash Flows from Operating ActivitiesThe direct method reports the sources of operating cash and the uses of operating cash.1The indirect method reports the operating cash flows by beginning with net e and adjusting i

6、t for revenues and expenses that do not involve the receipt or payment of cash.1The primary advantage of the indirect method is that it reconciles the difference between net e and net cash flows from operations. Also, the indirect method is less costly to use than the direct method.Over 99% of compa

7、nies use the indirect method.1Cash Flows from Operations: Direct and Indirect MethodsNetSolutionsThe same1Exhibit 2Cash Flows from Investing ActivitiesCash inflows from investing activities normally arise from selling fixed assets, investments, and intangible assets.Cash outflows from investing acti

8、vities normally include payments to acquire fixed assets, investments, and intangible assets.1Cash inflows from financing activities normally arise from issuing debt or equity securities.Cash outflows from financing activities normally include paying cash dividends, repaying debt, and acquiring trea

9、sury stock. Cash Flows from Financing Activities1Noncash investing and financing activities are transactions that do not directly affect cash. The effect of such transactions is recorded in a separate schedule that appears at the bottom of the statement of cash flows.Noncash Investing and Financing

10、Activities1No Cash Flow Per ShareCash flow per share should not be reported on a companys financial statements for the following reasons:Users may misinterpret cash flow per share as the per-share amount available for dividends.Users may misinterpret cash flow per share as equivalent to earnings per

11、 share.1Identify whether each of the following would be reported as an operating, investing, or financing activity in the statement of cash flows.Purchase of patentd.Cash salePayment of cash dividende.Purchase of treasury stockDisposal of equipmentf.Payment of wages expenseifi16-151 Example Exercise

12、 16-1For Practice: PE 16-1A, PE 16-1B Follow My Example 6-1 Follow My Example 16-1Left-click the mouse for the coded answers (operating = o; investing i; financing = f) Classifying Cash Flowsofo16-162Prepare a statement of cash flows, using the indirect method.The indirect method of reporting cash f

13、lows from operating activities uses the logic that a change in any balance sheet account (including Cash) can be analyzed in terms of changes in other balance sheet accounts.Efficient Approach2 e Statement and Comparative Balance Sheet(continued)2Exhibit 32 e Statement and Comparative Balance Sheet

14、(continued)Exhibit 3The analysis of Retained Earnings provides a good starting point for determining the cash flows from operating activities.Retained Earnings2The Retained Earnings account for Rundell Inc. reveals that the balance increased $80,000 during the year.The net e of $108,000 is the first

15、 amount reported in the Cash Flows from Operating Activities section.2Cash flows from operating activities:Net e $108,000Adjustments to reconcile net e to net cash flow from operating activities:This phrase is added to indicate that accrual basis net e is being adjusted to arrive at cash flows from

16、operations.Adjustments to Net e2Adjustments to Net e (Loss) Using the Indirect Method2Exhibit 4Step 1Step 2Step 3Step 1Expenses that do not affect cash are added. Such expenses decreased net e, but did not involve cash payments and, thus, are added to net e. Examples include depreciation of fixed as

17、sets and amortization of intangible assets.2Step 2Loses and gains on disposal of assets are added or deducted. The disposal (sale) of assets is an investing activity, rather than an operating activity. Losses on disposal of assets are added back to net e. Gains on disposal of assets are deducted fro

18、m net e.2Step 3Changes in current operating assets and liabilities are added or deducted as follows:Increases in noncash current operating assets are deducted.Decreases in noncash current operating assets are added.Increases in current operating liabilities are added.Decreases in current operating l

19、iabilities are deducted.2 Example Exercise 16-2Adjustments to Net eIndirect Method216-27Omni Corporations accumulated depreciation increased by $12,000, while patents decreased by $3,400 between balance sheet dates. There were no purchases or sales of depreciable or intangible assets during the year

20、. In addition, the e statement showed a gain of $4,100 from sale of land. Reconcile a net e of $50,000 to net cash flow from operating activities.Example Exercise 16-2 (continued)2Net e.$50,000Adjustments to reconcile net e to netcash flow from operating activities:Depreciation.12,000Amortization of

21、 patents.3,400Gain on sale of land. (4,100)Net cash flow from operating activities.$61,30016-28For Practice: PE 16-2A, PE 16-2B Follow My Example 16-2Cash Flows from Operating ActivitiesIndirect MethodStep 2Step 1Step 32Exhibit 5(continued on Slide 31)Step 1: The comparative balance sheets indicate

22、that Accumulated DepreciationBuilding increased by $7,000. The account, shown below, indicates that Accumulated DepreciationBuilding increased by $7,000.2Step 12Cash Flows from Operating ActivitiesIndirect Method (continued)Exhibit 5(continued on Slide 33)The proceeds, which included the gain, are r

23、eported in the Investing section of the statement of cash flows. Thus, the $12,000 is deducted from net e in determining cash flows from operating activities.Step 22Step 22Cash Flows from Operating ActivitiesIndirect Method (continued)Exhibit 5(continued on Slide 36)Next, select the current operatin

24、g assets and liabilities that impact cash flows and determine their increases and decreases. Slide 35 may prove helpful.Step 32Note that Cash and Dividends Payable are not included in this analysis. AccountsAccounts receivable (net)$ 74,000$ 65,000Inventories172,000180,000Accounts payable (mdse.)43,

25、50046,700Accrued expenses payable26,50024,300 e taxes payable7,9008,4009,0008,000*3,200*2,200500* 2010 2009 December 31 Increase Decrease*2Step 2Step 1Step 32Cash Flows from Operating ActivitiesIndirect Method (concluded)Exhibit 5 Example Exercise 16-3Changes in Current Operating Assets and Liabilit

26、iesIndirect Method2Victor Corporations comparative balance sheet for current assets and current liabilities was as follows:Dec. 31, 2011Dec. 31, 2010Accounts receivable$ 6,500$ 4,900Inventory12,30015,000Accounts payable4,8005,200Dividends payable5,0004,000Adjust net e of $70,000 for changes in opera

27、ting assets and liabilities to arrive at cash flows from operating activities.16-37Example Exercise 16-3 (continued)2Net e.$70,000Adjustments to reconcile net e to net cash flow from operating activities:Increase in accounts receivable.(1,600)Decrease in inventory.2,700Decrease in accounts payable (

28、400)Net cash flow from operating activities . $70,70016-38For Practice: PE 16-3A, PE 16-3B Follow My Example 16-3 Example Exercise 16-4Cash Flows from Operating ActivitiesIndirect Method2Omicron, Inc. reported the following data:Prepare the cash flows for operating activities section of the statemen

29、t of cash flows using the indirect method.Net e$120,000Depreciation expense12,000Loss on disposal of equipment15,000Increase in Accounts receivable5,000Decrease in Accounts payable(2,000)16-39Example Exercise 16-4 (continued)2Cash flows from operating activities:Net e.$120,000 Adjustments to reconci

30、le net e to net cash flow from operating activities:Depreciation.12,000Loss from disposal of equipment.15,000Changes in current operating assets and liabilities: Increase in accounts receivable.(5,000) Decrease in accounts payable. (2,000)Net cash flow from operating activities.$140,00016-40For Prac

31、tice: PE 16-4A, PE 16-4B Follow My Example 16-4DividendsCash dividends of $28,000 were declared during 2010. Note the entry highlighted in yellow.2Only $24,000 of the dividends was paid in 2010.Since dividend payments are a financing activity, the dividend payment is reported in the Financing Activi

32、ties section.2Common StockRundell, Inc.s Common Stock account increased by $8,000 during 2010.2Paid-in Capital in Excess of ParCommon Stock increased $40,000 during the year.Issuing company stock is a financing activity, so cash flows from financing activities increases by $48,000 ($8,000 + $40,000)

33、. 2Bonds PayableBonds Payable decreased $50,000 during 2010. A check with Rundells e statement show that there was no gain or loss on the retirement.Retiring a bond payable is a financing activity, so a cash outflow of $50,000 is reported in the Financing Activities section of the statement of cash

34、flows.2BuildingThe Building account increased by $60,000.The cash outflow for this purchase is shown in the Financing Activities section of the statement.2LandThe $45,000 decline in the Land account was from two transactions.2Step 2Earlier, as part of Step 2 in preparing the Operating Activities sec

35、tion, the $12,000 gain was deducted from net e.The proceeds of $72,000 from the sale of land are reported in the Investing Activities section of the statement of cash flows.2The October 12 transaction is the purchase of land for cash of $15,000. This transaction is reported as an outflow of cash in

36、the Cash Flows from Investing Activities section.2 Example Exercise 16-5Land Transactions on the Statement of Cash Flows2Alpha Corporation purchased land for $125,000. Later in the year the company sold land with a book value of $165,000 for $200,000. How are the effects of these transactions report

37、ed on the statement of cash flows?16-50Example Exercise 16-5 (continued)2The gain on sale of land is deducted from net e as shown below:Gain on sale of land.$(35,000)Cash received for sale of land$200,000Cash paid for purchase of land.(125,000)The purchase and sale of land is reported as part of cas

38、h inflow from investing activities as shown below:16-51For Practice: PE 16-5A, PE 16-5B Follow My Example 16-5payableStatement of Cash FlowsIndirect Method2Exhibit 616-533Prepare a statement of cash flows, using the direct method.The final amount reported in the Cash Flows from Operating Activities

39、section will be the same whether the direct or indirect approach is used. The methods differ in how the data are obtained, analyzed, and reported. The Direct Method3Cash Received from CustomersRundell, Inc. reports sales of $1,180,000 for 2010. To determine the cash received from customers, sales ar

40、e adjusted by any increase or decrease in accounts receivable.33$(9,000)$1,180,000= $1,171,000$0Cash Received from CustomersDirect MethodSales reported on the e statement were $350,000. The accounts receivable balance declined $8,000 over the year. Determine the amount of cash received from customer

41、s.For Practice: PE 16-6A, PE 16-6B Example Exercise 16-616-57Sales$350,000Add decrease in accounts receivable 8,000Cash received from customers$358,000 Follow My Example 16-63Cash Payments for MerchandiseRundell, Inc. reports cost of merchandise sold of $790,000. To determine the cash payment for me

42、rchandise, the $790,000 is adjusted for any increase or decrease in inventories and accounts payable (assuming the accounts payable are owed to merchandise suppliers).3$(8,000)$3,200$790,000= $785,2003Cash Payment for MerchandiseDirect MethodCost of merchandise sold reported on the e statement was $

43、145,000. The accounts payable balance increased $4,000, and the inventory balance increased by $9,000 over the year. Determine the amount of cash paid for merchandise.For Practice: PE 16-7A, PE 16-7B Example Exercise 16-716-60Cost of merchandise sold$145,000Add increase in inventory9,000Deduct increase in accounts payable. (4,000)Cash paid for merchandise.$150,000 Follow My Example 16-73Cash Payments for Operating ExpensesRundell, Inc. reports total operating expenses of $203,000, which includes depreciation expense