Beruflich Dokumente
Kultur Dokumente
Flows
C15 - 1
Reporting Cash Flows
C15 - 2
Cash Flows
Increases in Cash Decreases in Cash
Cash
C15 - 3
Cash Flows
Increases in Cash Decreases in Cash
Operating
(receipts from
revenues)
Cash
C15 - 4
Cash Flows
Increases in Cash Decreases in Cash
Operating Operating
(receipts from (payments for
revenues) expenses)
Cash
C15 - 5
Cash Flows
Increases in Cash Decreases in Cash
Operating Operating
(receipts from (payments for
revenues) expenses)
Investing
Cash
(receipts from sales of
noncurrent assets)
C15 - 6
Cash Flows
Increases in Cash Decreases in Cash
Operating Operating
(receipts from (payments for
revenues) expenses)
Investing
Cash Investing
(receipts from sales of (payments for aquiring
noncurrent assets) noncurrent assets)
C15 - 7
Cash Flows
Increases in Cash Decreases in Cash
Operating Operating
(receipts from (payments for
revenues) expenses)
Investing
Cash Investing
(receipts from sales of (payments for aquiring
noncurrent assets) noncurrent assets)
Financing
(receipts from issuing
equity and debt securities)
C15 - 8
Cash Flows
Increases in Cash Decreases in Cash
Operating Operating
(receipts from (payments for
revenues) expenses)
Investing
Cash Investing
(receipts from sales of (payments for aquiring
noncurrent assets) noncurrent assets)
Financing Financing
(receipts from issuing (payments for dividends, and
equity and debt securities) redemption of debt securities)
C15 - 9
Cash Flows – Operating Activities
Typical cash inflows Typical cash outflows
C15 - 10
Cash Flows – Operating Activities
Typical cash inflows Typical cash outflows
Sales of goods
and services What are some
of the typical
Interest Revenue cash outflows
from operating
Dividend Revenue activities?
C15 - 11
Cash Flows – Operating Activities
Typical cash inflows Typical cash outflows
Tax payments
C15 - 12
Cash Flows – Investing Activities
Typical cash inflows Typical cash outflows
C15 - 13
Cash Flows – Investing Activities
Typical cash inflows Typical cash outflows
C15 - 14
Cash Flows – Investing Activities
Typical cash inflows Typical cash outflows
C15 - 15
Cash Flows – Financing Activities
Typical cash inflows Typical cash outflows
C15 - 16
Cash Flows – Financing Activities
Typical cash inflows Typical cash outflows
Sales (issuance)
of stock What are some
of the typical
Sale (issuance) of
cash outflows
bonds and other
money market debt from financing
activities?
Borrowing from banks
and other lending
institutions
C15 - 17
Cash Flows – Financing Activities
Typical cash inflows Typical cash outflows
C15 - 18
Statement of Cash Flows
C15 - 19
Preparing the Statement of Cash Flows
Direct Method
Net cash flows from operating activities will be
the difference between the operating cash
receipts and operating cash payments.
Indirect Method
Net cash flows from operating activities is
determined by adjusting the accrual net income
from operations to reflect a cash-based net income
from operations.
C15 - 20
Advantages of Using the Direct Method
C15 - 21
Advantages of Using the Indirect Method
C15 - 22
NetSolutions
Statement of Cash Flows – Direct Method
For the Month Ended November 30, 2015
C15 - 23
NetSolutions
Statement of Cash Flows – Indirect Method
For the Month Ended November 30, 2015
C15 - 24
NetSolutions
Statement of Cash Flows – Direct Method
For the Month Ended November 30, 2015
Cash flows from operating activities:
Cash received from customers $ 7,500
Deduct cash payments for expenses
and payment to creditors 4,600
Net cash flow from operating activities $ 2,900
NetSolutions
Statement of Cash Flows – Indirect Method
For the Month Ended November 30, 2015
Cash flows from operating activities:
Net income, per income statement $ 3,050
Add increase in accounts payable 400
Deduct increase in supplies (550)
Net cash flow from operating activities $ 2,900
C15 - 25
NetSolutions
Statement of Cash Flows – Direct Method
For the Month Ended November 30, 2015
Cash flows from operating activities:
Cash received from customers $ 7,500
Deduct cash payments for expenses
and payment to creditors 4,600
Net cash flow from operating activities $ 2,900
NetSolutions
Statement of Cash Flows – Indirect Method
For the Month Ended November 30, 2015
Cash flows from operating activities:
Net income, per income statement $ 3,050
Add increase in accounts payable 400
Deduct increase in supplies (550)
Net cash flow from operating activities $ 2,900
C15 - 26
Cash Relationships and Cash Flows
Balance Sheet
Cash
Liabilities
Noncash
Assets Stockholders’
Equity
C15 - 27
Cash Relationships and Cash Flows
Balance Sheet
Cash
Liabilities
Noncash
Assets Stockholders’
Equity
C15 - 28
Cash Relationships and Cash Flows
Balance Sheet
Cash
1 Liabilities
Noncash
3 Assets Stockholders’
2 Equity
C15 - 30
Changes in Current Accounts
Change
Accounts 2014 2015 Debit Credit
Trade receivables (net) $74,000 $65,000 9,000
Inventories 172,000 180,000 8,000
Accounts payable (mdse.) 43,500 46,700 3,200
Accrued expenses payable 26,500 24,300 2,200
Income taxes payable 7,900 8,400 500
C15 - 31
Changes in Current Accounts
Change
Accounts 2014 2015 Debit Credit
Trade receivables (net) $74,000 $65,000 9,000
Inventories 172,000 180,000 8,000
Accounts payable (mdse.) 43,500 46,700 3,200
Accrued expenses payable 26,500 24,300 2,200
Income taxes payable 7,900 8,400 500
C15 - 32
Operating Activities – Indirect Method
Cash flows from operating activities:
Net income, per income statement $108,000
Add: Depreciation $ 7,000
Decrease in inventories 8,000
Increase in accrued expenses 2,200 17,200
$125,200
Increase in accounts receivables
Deduct: $ 9,000
Decrease in accounts payable 3,200
Decrease in income taxes payable 500
Gain on sale of land 12,000 24,700
Net cash flow from operating activities $100,500
C15 - 33
Operating Activities – Indirect Method
Cash flows from operating activities:
Net income, per income statement $108,000
Add: Depreciation $ 7,000
Decrease in inventories 8,000
Increase in accrued expenses 2,200 17,200
$125,200
Deduct: Increase in accounts receivables $ 9,000
Decrease in accounts payable 3,200
Decrease in income taxes payable 500
Gain on sale of land 12,000 24,700
Net cash flow from operating activities $100,500
C15 - 34
Operating Activities – Indirect Method
Cash flows from operating activities:
Net income, per income statement $108,000
Add: Depreciation $ 7,000
Decrease in inventories 8,000
Increase in accrued expenses 2,200 17,200
$125,200
Deduct: Increase in accounts receivables $ 9,000
Decrease in accounts payable 3,200
Decrease in income taxes payable 500
Gain on sale of land 12,000 24,700
Net cash flow from operating activities $100,500
This gain was included in net income but did not represent an
operating cash flow. The related cash inflow from the sale is
reported in the cash flows from investing activities section.
C15 - 37
Changes in Current Accounts
Change
Accounts 2014 2015 Debit Credit
Trade receivables (net) $74,000 $65,000 9,000
Inventories 172,000 180,000 8,000
Accounts payable (mdse.) 43,500 46,700 3,200
Accrued expenses payable 26,500 24,300 2,200
Income taxes payable 7,900 8,400 500
C15 - 38
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000
Cost of merchandise sold 790,000
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000
Other operating expenses 196,000
Total operating expenses 203,000
Income from operations $ 187,000
Other income:
Gain on sale of land $12,000
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income taxaccrual basis income statement.83,000
This is an
Net
Theincome
direct method of reporting cash flows$ 108,000
will
essentially convert this to a cash basis statement.
C15 - 39
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $960,000
Cost of merchandise sold 580,000
Gross profit Cash collected $380,000
from customers Changes
Operating expenses:
Debit Credit
Depreciation expense $ 18,000
Sales 960,000
Other operating expenses 260,000
Receivables
Note:
Total operating All income9,000
expenses statement account
278,000
Cash
balances are zero at the
Income from operations beginning
$102,000
Other income: of a period. Therefore, the balance
shown represents
Gain on sale of investments the amount of
$30,000
Other expense: change during the period.
Interest expense 14,000 16,000
Income before income tax $118,000
Income tax 27,500
Net income $ 90,500
C15 - 40
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000
Cost of merchandise sold 790,000
Gross profit Cash collected $390,000
from customers Changes
Operating expenses:
Debit Credit
Depreciation expense $ 7,000
Sales 1,180,000
Other operating expenses 196,000
Receivables
Total operating expenses 9,000 203,000
Income from Note: Cash
The
operationschanges1,171,000
in the current balance sheet
$187,000
Other income: accounts are determined by comparing the
beginning
Gain on sale of land and ending balances. Receivables
$12,000
Other expense:increased by $9,000 during the period.
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 41
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000
Gross profit Cash collected $390,000
from customers Changes
Operating expenses:
Debit Credit
Depreciation expense $ 7,000
Sales 1,180,000
Other operating expenses 196,000
Receivables
Total operating expenses 9,000 203,000
Cash
Income from operations 1,171,000 $187,000
Other income:
The increase $12,000
Gain on sale of land in receivables
Other expense: represents a reduction in cash inflow
Interest expense relative to the accrual
8,000 revenue
4,000
Income before income reported
tax on the income statement.
$ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 42
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000
Gross profit $390,000
Cash payments for
Operating expenses: Changes
merchandise
Depreciation expense $ Debit
7,000 Credit
Other operating
Cost ofexpenses
mdse. sold 196,000
790,000
Total operating expenses 203,000
Inventories 8,000
Income from operations $187,000
Accounts payable 3,200
Other income:
Cash
Gain on sale of land $12,000
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 43
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 785,200
Gross profit $390,000
Cash payments for
Operating expenses: Changes
merchandise
Depreciation expense $ 7,000
Debit Credit
Other operating
Cost ofexpenses
mdse. sold 196,000
790,000
Total operating expenses 203,000
Inventories 8,000
Income from operations $187,000
Accounts payable 3,200
Other income:
Cash
Gain on sale of land $12,000 785,200
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 44
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 785,200
Gross profit $390,000
Cash payments for
Operating expenses: Changes
merchandise
Depreciation expense $ 7,000
Debit Credit
Other operating
Cost ofexpenses
mdse. sold 196,000
790,000
Total operating expenses 203,000
Inventories 8,000
Income from operations $187,000
Accounts payable 3,200
Other income:
Cash
Gain on sale of land $12,000 785,200
Other expense: A decrease in inventories (credit
Interest expense change) and an 8,000 4,000
decrease in accounts
Income before income tax
payable $ 191,000
(debit change) have the
Income tax opposite effects. 83,000
Net income $ 108,000
C15 - 45
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000
Other operating expenses 196,000
Depreciation
Total operating expenses Changes
203,000
Income from operations Debit $187,000
Credit
Other income:Depr. expense 7,000
Accum.
Gain on sale depreciation
of land $12,000 7,000
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 46
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000
Depreciation
Total operating expenses Changes
203,000
Income from operations Debit$187,000
Credit
Other income:Depr. expense 7,000
Accum.
Gain on sale depreciation
of land $12,000 7,000
Other expense: There is no cash flow for
Interest expense 8,000
depreciation 4,000
expense.
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 47
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000
Total operating expenses 203,000
Cash payments for Changes
Income from operations $187,000
operating expenses Changes
Other income: Debit Credit
Gain onOperating expenses $12,000
sale of land 196,000
Other expense:
Accrued expenses 2,200
Interest Cash
expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 48
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Cash payments for Changes
Income from operations $187,000
operating expenses Changes
Other income: Debit Credit
Gain onOperating expenses $12,000
sale of land 196,000
Other expense:
Accrued expenses 2,200
Interest Cash
expense 8,000 193,8004,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 49
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $390,000
Gain on sale of Changes
Operating expenses:
investments Debit Credit
Depreciation expense $ 7,000 0
Cash
Other operating expenses 72,000
196,000 (193,800)
TotalInvestments
operating expenses 60,000
203,000
Income fromGain on sale of invest.
operations 12,000
$187,000
Other income:
Gain on sale of land $12,000 0
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 50
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $390,000
Gain on sale of Changes
Operating expenses:
investments
Depreciation expense $ Debit
7,000 Credit 0
Cash
Other operating expenses 72,000
196,000 (193,800)
TotalInvestments
operating expenses 60,000
203,000
Income fromGain on sale of invest.
operations 12,000
$187,000
Other income:
Gain on sale of land $12,000 0
Other expense: Why isn’t the cash inflow
Interest expense 8,000
of $72,0004,000
shown here?
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 51
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $390,000
Gain on sale of Changes
Operating expenses:
investments Debit Credit
Depreciation expense $ 7,000 0
Cash
Other operating expenses 196,00072,000 (193,800)
TotalInvestments
operating expenses 60,000
203,000
Income fromGain on sale of invest.
operations 12,000
$187,000
Other income:
Gain on sale of land $12,000 0
Other expense: The cash inflow of $72,000
Interest expense will be shown8,000in the 4,000
Income before income tax
investing section of $the
191,000
Income tax statement of cash flows. 83,000
Net income $ 108,000
C15 - 52
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Cash paid
Total operating for
expenses 203,000
Changes
interest expense
Income from operations Debit $187,000
Credit
Other income:
Interest expense 8,000
Gain onCash
sale of land $12,000 0
Other expense:
Interest expense 8,000 4,000
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 53
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Cash paid
Total operating for
expenses 203,000
Changes
interest expense
Income from operations 187,000
Debit Credit
Other income:
Interest expense 8,000
Gain onCash
sale of land $12,000 8,000 0
Other expense:
Interest expense 8,000 4,000 (8,000)
Income before income tax is no interest$payable
There 191,000
Income tax account at the end of the 83,000
year.
Net income $ 108,000
C15 - 54
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Cash paid for
Income from operations Changes
$187,000
Other income:income taxes Debit Credit
Gain onIncome
sale of tax
landexpense $12,000
83,000
Other expense:
Income tax payable 500
Interest Cash
expense 8,000 4,000 (8,000)
Income before income tax $ 191,000
Income tax 83,000
Net income $ 108,000
C15 - 55
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Cash paid for
Income from operations Changes
$187,000
Other income:income taxes Debit Credit
Gain onIncome
sale of tax
landexpense $12,000
83,000
Other expense:
Income tax payable 500
Interest Cash
expense 8,000 83,500
4,000 (8,000)
Income before income tax $ 191,000
Income tax 83,000 (83,500)
Net income $ 108,000
C15 - 56
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Income from operations $ 187,000
Other income:
Gain on sale of land $12,000 0
Other expense:
Interest expense 8,000 4,000 (8,000)
Income before income tax $ 191,000
Income tax 83,000 (83,500)
Net income $ 108,000 $ 100,500
C15 - 57
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Income from operations Two different views
$ 187,000
Other income: of income from
Gain on sale of land $12,000 operations 0
Other expense:
Interest expense 8,000 4,000 (8,000)
Income before income tax $ 191,000
Income tax 83,000 (83,500)
Net income $ 108,000 $ 100,500
C15 - 58
Rundell Inc.
Income Statement
For the Year Ended December 31, 2014 Cash Basis
Sales $1,180,000 $1,171,000
Cost of merchandise sold 790,000 (785,200)
Gross profit $ 390,000
Operating expenses:
Depreciation expense $ 7,000 0
Other operating expenses 196,000 (193,800)
Total operating expenses 203,000
Income from operations Two different views
$ 187,000
Other income: of income from
Gain on sale of land $12,000 operations 0
Other expense:
Interest expense 8,000 4,000 (8,000)
Income before income tax Accrual
$ 191,000 Cash
Income tax Basis
83,000 Basis
(83,500)
Net income $ $108,000
108,000 $$100,500
100,500
C15 - 59
Operating Activities – Direct Method
Cash flows from operating activities:
Cash inflows:
Cash received from customers $1,171,000
Cash outflows:
Cash payments for merchandise $785,200
Cash payments for operating expenses 193,800
Cash payments for interest 8,000
Cash payments for income tax 83,500 1,070,500
Net cash flow from operating activities $ 100,500
C15 - 60
Financial Analysis and Interpretation
C15 - 61