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accounting 5
accounting chapter 5 WGU C213
| Question | Answer |
|---|---|
| statement of cash flows | summarize of companys cash flows for a period of time provides info that is not readily apparent by looking at just the balance sheet and incomes statement |
| pro forma | a prediction of what the actual cash flow statement will look like in future years if the operating, investing and financing plans are implemented |
| cash equivalents | short-term, highly liquid investments such as treasury bills, commercial paper, and market money funds |
| statements of cash flow, cash receipts and payments are categorized into: | 1) operating activities 2) investing activities 3) financing activites |
| operation activities | all transactions relating to a companys delivering or producing its goods for sale and providing its services |
| investing activities | cash inflows and outflows from 1) acquiring and selling productive assets 2) acquiring and selling investment securities 3) lending money and collecting on those loans |
| financing activities | obtaining resources from owners and providing them a return on their investments, and obtaining resources from creditors and repaying those borrowings |
| non-cash investing and financing activites | some investing and financing activates affect a companies financial position but not the companys cash flow during the period |
| operating activities cash receipts | Sales of goods or services Sales of trading securities Intrest revenue Dividend revenue |
| Operating activities cash payments | inventory purchases wages and salaries taxes intrest expense other expenses (utilities, rent) purchase of trading securities |
| investing activities cash receipts from | sales of plant assets sales of business segment sales of non trading securites collection of principle on loans |
| investing activities cash payments for | purchase of plant assets purchase of nontrading securities making loans to other entitites |
| financing activities cash receipts from | insurance of stock borrowing (bonds, notes, mortgages) |
| financing activities cash payments for | cash dividends repayment loans repurchase of stock (treasury stock) |
| 6 step process systematic method income statements/balance sheets to prep cash flow statements (steps 1-3) | 1)compute cash balance changed during the year 2) convert the income statement from accrual-basis to cash-basis summary operations 3)analyze long-term assets to ID the cash flow effects of investing activates |
| 6 step process systematic method income statements/balance sheets to prep cash flow statements (steps 3-6) | 4)analyze all debt cash flow effects 5) total net cash flow from op, investing and financing activates all = to net increase or decrease 6) disclose any significant investing or financing transactions that did no involve cash |
| indirect method | for cash flow statements (a method may or may not be used) uses accrual accounting info to present cash flows from op sections of the cash flow statement |
| indirect method rule of thumb rules | current asset > increase> subtract the increase current asset > decrease> add the decrease current liability > increase > add increase current liability > decrease> subtract the decrease |
| ending balance in retained earnings without dividend payments equation | beginning balance in retained earnings + net income for the year = ending balance of retained earnings w/o dividend pmts |
| cash flow statment | 1 page summary of results of a companies operating, investing and financing activies for a period |
Created by:
1piper4me
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