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C213 Chap 6
Stmnt Cash Flows
| Question | Answer |
|---|---|
| summarizes a company's cash flows for a period of time and how that cash was used | statement of cash flows |
| measures the results of operations for a period of time | income statement |
| the accountant's best estimate of a company's economic performance for a period | net income |
| reports the period's transactions and events in terms of their impact on cash | statement of cash flows |
| statement of cash flows includes | information on operating, investing, and financing activities |
| a prediction of what the actual cash flow statement will look like in future years if the operating, investing, and financing plans are implemented | pro forma or 'projected' |
| short-term, highly liquid investments such as Treasury bills, commercial paper, and money market funds | cash equivalents |
| operating, investing, and financing | statement of cash flows 3 categories |
| operating activities | All transactions relating to a company's delivering or producing its goods for sale and providing its services are called |
| investing activities | All transactions relating to a company's delivering or producing its goods for sale and providing its services are called |
| financing activities | Obtaining resources from owners and providing them a return on their investment, and obtaining resources from creditors and repaying those borrowings |
| notes receivable | would NOT be considered cash or cash equivalent |
| purchase of treasury stock would be | reported as a financing activity on a statement of cash flows |
| amounts borrowed would NOT | be reported on a stmnt of cash flows as an investing activity |
| dividends paid would NOT | be reported on a stmnt of cash floes as an operating activity |
| cash receipts on the issuance of a long term debt | would be reported as a financing activity on a stmnt of cash flow |
| the indirect method is | more commonly used that the direct method |
| reporting the information contained in the last column of the adjustment worksheet | direct method |
| reporting the information contained in the last column of the adjustment worksheet | indirect method |
| The direct method of presenting a statement of cash flows | Shows the major classes of operating cash receipts and payments |
| 6 step process step 1: | Compute the change in cash |
| 6 step process step 2: | Convert the income statement from an accrual to a cash basis |
| 6 step process step 3 | Analyze the long-term asset accounts |
| 6 step process step 4: | Analyze the long-term debt and stockholders' equity accounts |
| 6 step process step 5: | Prepare the statement of cash flows |
| 6 step process step 6: | Disclose any significant non-cash activities |
| In the absence of detailed cash account information, a company's cash inflows and outflows can be inferred through a careful analysis of each account contained in the balance sheet and the income statement | 6 step process definition |
Created by:
nashanta
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