AccountingPrinciplesStatementofCashFlows幻灯片.pptxVIP

;Learning Objectives;Provides information to help assess: Entity’s ability to generate future cash flows. Entity’s ability to pay dividends and meet obligations. Reasons for difference between net income and net cash provided (used) by operating activities. Cash investing and financing transactions during the period.;Income Statement Items;;;;Direct issuance of common stock to purchase assets. Conversion of bonds into common stock. Issuance of debt to purchase assets. Exchanges of plant assets.;Net What?;Order of Presentation: Operating activities. Investing activities. Financing activities.;Three Major Steps:;;;Companies favor the indirect method for two reasons: Easier and less costly to prepare. Focuses on differences between net income and net cash flow from operating activities.;Illustration 17-4;Illustration 17-4;Indirect Method;DETERMINE NET CASH PROVIDED/USED BY OPERATING ACTIVITIES BY CONVERTING NET INCOME FROM ACCRUAL BASIS TO CASH BASIS.;Which is an example of a cash flow from an operating activity? Payment of cash to lenders for interest. Receipt of cash from the sale of capital stock. Payment of cash dividends to the company’s stockholders. None of the above.;DEPRECIATION EXPENSE;LOSS ON DISPOSAL OF EQUIPMENT;Illustration 17-7;CHANGES TO NONCASH CURRENT ASSET;Illustration 17-9;When the Inventory balance increases, the cost of merchandise purchased exceeds the cost of goods sold. ;Step 1: Operating Activities;When the Prepaid Expense balance increases, cash paid for expenses is higher than expenses reported on an accrual basis. The company deducts the decrease from net income to arrive at net cash provided by operating activities. If prepaid expenses decrease, reported expenses are higher than the expenses paid.;Step 1: Operating Activities;CHANGES IN CURRENT LIABILITIES;Illustration 17-10;Summary of Conversion to Net Cash Provided by Operating Activities—Indirect Method;Josh’s PhotoPlus reported net income of $73,000 for 2017. Included in the incom