Chapter 15 - Statement of cash flows. This chapter presents the following content: Purpose of statement of cash flows, cash and cash equivalents, operating activities, other cash flow considerations, direct method,. | Statement of Cash Flows Purpose of Statement of Cash Flows Provide information about cash receipts and payments during an accounting period Helps us see how financial position changes during an accounting period Only statement that collects and shows in one statement the causes of changes in cash during a financial reporting period Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Readily convertible to known amounts of cash Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Readily convertible to known amounts of cash So near maturity that they are not likely to change in value due to changes in interest rates Classification of Cash Receipts and Cash . | Statement of Cash Flows Purpose of Statement of Cash Flows Provide information about cash receipts and payments during an accounting period Helps us see how financial position changes during an accounting period Only statement that collects and shows in one statement the causes of changes in cash during a financial reporting period Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Readily convertible to known amounts of cash Cash and Cash Equivalents Cash includes currency on hand and demand deposits Cash equivalents are short-term, highly liquid investments that are Readily convertible to known amounts of cash So near maturity that they are not likely to change in value due to changes in interest rates Classification of Cash Receipts and Cash Payments Operating activities Investing activities Financing activities Operating Activities Transactions that generally involve producing and delivering goods and providing services Inflows selling goods and services, interest and dividend revenue Outflows inventory, salary exp, interest exp Investing Activities Buying and selling plant assets and securities, and making loans and collecting on them Inflows sale of plant assets and investment securities, collecting loans Outflows purchasing plant assets, investment securities Financing Activities Obtaining resources from owners and providing return, and obtaining resources from creditors and repaying principal Inflows issuing stock, bonds, other short and long-term borrowing Outflows purchasing treasury stock, repaying principal, cash dividends Other Cash Flow Considerations Generally, information on gross receipts and payments more relevant When issuing long-term debt to retire other debt, show both Noncash investing and financing .
