Chapter 13 - Statement of cash flow. This chapter include objectives: Describe the content and format of the statement of cash flows, prepare the operating activities section of a statement of cash flows using the direct method, prepare the investing and financing activities sections and complete the statement of cash flows,. | CHAPTER 13: Statement of Cash Flow LO 1: Describe the content and format of the statement of cash flows. LO 2: Prepare the operating activities section of a statement of cash flows using the direct method. LO 3: Prepare the investing and financing activities sections and complete the statement of cash flows. LO 4: Use the statement of cash flows to evaluate a company. LO 5: Prepare the operating activities section of a statement of cash flows using the direct method. (Appendix 13A) LEARNING OBJECTIVES Helps users assess: A company’s ability to generate cash What the company did with the cash This is useful in determining: Company’s ability to generate future cash flows Investing and financing transactions during the period, and effect upon capital structure Making comparisons with other companies Purpose of the Statement of Cash Flows Cash may include cash equivalents Short-term, highly liquid held for trading investments that have insignificant risk and are readily converted to cash | CHAPTER 13: Statement of Cash Flow LO 1: Describe the content and format of the statement of cash flows. LO 2: Prepare the operating activities section of a statement of cash flows using the direct method. LO 3: Prepare the investing and financing activities sections and complete the statement of cash flows. LO 4: Use the statement of cash flows to evaluate a company. LO 5: Prepare the operating activities section of a statement of cash flows using the direct method. (Appendix 13A) LEARNING OBJECTIVES Helps users assess: A company’s ability to generate cash What the company did with the cash This is useful in determining: Company’s ability to generate future cash flows Investing and financing transactions during the period, and effect upon capital structure Making comparisons with other companies Purpose of the Statement of Cash Flows Cash may include cash equivalents Short-term, highly liquid held for trading investments that have insignificant risk and are readily converted to cash within a short period of time (usually within three months) Cash receipts and payments are classified into three categories: Operating activities Investing activities Financing activities Definition of Cash Classification of Cash Flows Cash effects of transactions that create revenues and expenses that enter into determination of profit Includes relevant noncash current assets and current liabilities on the statement of financial position Where the related account is an income statement account Operating Activities Purchasing and disposing of: Long-term investments not held for trading Long-lived assets Lending money and collecting the loans Generally includes non-current asset items (., long-lived investments, property, plant, and equipment) on the statement of financial position Investing Activities Obtaining cash from issuing debt and repaying the amounts borrowed Obtaining cash from selling common and preferred shares and paying dividends Generally includes non-current .
