Chapter 12 - Statement of cash flows. To make informed investment and credit decisions, financial statement users need information to help them assess the amounts, timing, and uncertainty of a company’s prospective cash flows. This chapter explains more about the items reported on the statement of cash flows and describes a more practical way to prepare the statement than analyzing every entry in the Cash account. | Statement of Cash Flows Chapter Twelve McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. To make informed investment and credit decisions, financial statement users need information to help them assess the amounts, timing, and uncertainty of a company’s prospective cash flows. This chapter explains more about the items reported on the statement of cash flows and describes a more practical way to prepare the statement than analyzing every entry in the Cash account. Reporting Format for the Statement of Cash Flows Operating Activities Investing Activities Financing Activities The statement of cash flows must include the following three sections: 12- There are three basic sections on the statement of cash flows: Operating Activities Investing Activities Financing Activities Cash Flows from Operating Activities Cash Flows from Operating Activities Inflows (Receipts) Receipts from sales Commissions and fees Interest and dividends received Outflows (Payments) Payments for inventory Salaries and wages Operating expenses Interest on liabilities Taxes 12- Part 1 The operating activities section includes cash inflows and cash outflows that result from the operations of the business and some incidental business transactions. Operating cash inflows include cash received from customers in payment of goods sold. It also includes cash received as dividends and interest. Part 2 Operating cash outflows include cash payments for inventory, salaries, operating expenses, interest, and taxes. Gains and losses from disposal of operational assets are not shown on the statement of cash flows. The total amount of cash collected from these disposals is shown in the investing activities section of the statement of cash flows. Cash Flows from Investing Activities Cash Flows from Investing Activities Inflows (Receipts) Selling property, plant, and equipment Selling investment securities Collecting loans . | Statement of Cash Flows Chapter Twelve McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. To make informed investment and credit decisions, financial statement users need information to help them assess the amounts, timing, and uncertainty of a company’s prospective cash flows. This chapter explains more about the items reported on the statement of cash flows and describes a more practical way to prepare the statement than analyzing every entry in the Cash account. Reporting Format for the Statement of Cash Flows Operating Activities Investing Activities Financing Activities The statement of cash flows must include the following three sections: 12- There are three basic sections on the statement of cash flows: Operating Activities Investing Activities Financing Activities Cash Flows from Operating Activities Cash Flows from Operating Activities Inflows (Receipts) Receipts from sales Commissions and fees .
