基础会计(英文版)(第二版)Chapter 16 The Statement of Cash Flows.pptVIP

Chapter 16 The Statement of Cash Flows Purposes of the Statement of Cash Flows Lists inflows and outflows of cash and cash equivalents by category Explains the change in cash during the period Required to be prepared by business entities in China as from January 1, 1998 Purposes of the Statement of Cash Flows The statement helps users to assess the company’s ability to generate positive cash flows in future periods the companys ability to meet its obligations and to pay dividends the companys need for external financing reasons for differences between the amount of net income and the related net cash flow from operating activities both the cash and non-cash aspects of the company’s investment and financing transactions for the period causes of the change in the amount of cash and cash equivalents between the beginning and the end of the accounting period 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 Cash Flows from Operating Activities CASH RECEIPTS CASH PAYMENTS Cash Flows from Investing Activities CASH RECEIPTS CASH PAYMENTS Cash Flows from Financing Activities CASH RECEIPTS CASH PAYMENTS Format of the Statement of Cash Flows Approaches to Preparing a Statement of Cash Flows Two Formats for Reporting Operating Activities Reporting Cash Flows from Operating Activities in Direct Method – An Illustration Cash Received from Customers Net sales 600 000 000 Less: Increase in accounts receivable 3 000 000 Cash received from customers 597 000 000 Reporting Cash Flows from Operating Activities in Direct Method – An Illustration Cash Paid for Purchases of Merchandise Cost of goods sold 300 000 000 Add: Increase in inventory 1 000 000 Net pu