《AccountingBasics英语会计基础教学课件10.pptxVIP

Chapter 18 The statement of cash flowsWEEK 11Autumn 2012ACCY901Learning ObjectivesIndicate the usefulness of the statement of cash flowsDistinguish among operating, investing and financing activitiesPrepare a statement of cash flows using the direct methodStatement of cash flows- the indirect methodSTATEMENT OF CASH FLOWS:USEFULNESS AND FORMATLO1A statement of cash flows provides information about an entity’s cash receipts and cash payments during a periodIt 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 the cash balance during the period?Usefulness of the statement of cash flowsHelps investors, creditors and other interested parties to evaluate the following about the entity:Ability to generate future cash flowsAbility to pay dividends and meet obligationsReasons for difference between profit and net cash provided (used) by operating activitiesCash investing and financing transactions for the periodClassification of cash flowsLO2Operating activitiesCash effects of transactions that create income and expensesInvesting activitiesCash effects resulting from acquisition and disposal of long-term assetsFinancing activitiesCash effects resulting from long-term borrowing and shareholders’ equityOperating activitiesAre transactions involving the acquisition or production of goods and services and the sale and distribution of these goods and services to customers. Current asset and current liability transactions normally result from the operating activities of a company, such as buying and selling merchandise.Investing activities The acquisition/disposal of long-term assets and other investments during a financial period.. Examples include:Cash inflows from…Cash outflows to…Acquire non-current assets (PPE, intangibles, share investments)Sale of non-current assets (PPE, intangibles, share investments)Lend money to other partiesRepayments of lo