Chapter 11 - Statement of cash flows. In this chapter students will be able to: Classify cash transactions as operating, investing, or financing activities; prepare the operating activities section of the statement of cash flows using the indirect method; prepare the investing activities section and the financing activities section of the statement of cash flows; perform financial analysis using the statement of cash flows. | Statement of Cash Flows Chapter 11 1 Learning Objectives Classify cash transactions as operating, investing, or financing activities Prepare the operating activities section of the statement of cash flows using the indirect method Prepare the investing activities section and the financing activities section of the statement of cash flows Perform financial analysis using the statement of cash flows 11-2 Learning Objectives Prepare the operating activities section of the statement of cash flows using the direct method 11-3 Part A Formatting the Statement of Cash Flows 11-4 In this section, we will look at how the statement of cash flows is formatted. 4 Learning Objective 1 Classify cash transactions as operating, investing, or financing activities 11-5 Cash Flow Activities Operating activities: cash receipts and cash payments for transactions relating to revenue and expense activities Investing activities: cash transactions involving the purchase and sale of long-term assets and current investments Financing activities: inflows and outflows of cash resulting from the external financing of a business 11-6 The three primary categories of cash flows are: Operating activities include cash receipts and cash payments for transactions relating to revenue and expense activities. These are essentially the very same activities reported on the income statement. In other words, cash flows from operating activities include the elements of net income, but reported on a cash basis. Common examples of operating activities include the collection of cash from customers or the payment of cash for inventory purchases, salaries, and rent. Investing activities include cash transactions involving the purchase and sale of long-term assets and current investments. Companies periodically invest cash to replace or expand productive facilities such as buildings, land, and equipment. They might also invest in other assets, such as stocks or bonds of other companies, with the expectation of a . | Statement of Cash Flows Chapter 11 1 Learning Objectives Classify cash transactions as operating, investing, or financing activities Prepare the operating activities section of the statement of cash flows using the indirect method Prepare the investing activities section and the financing activities section of the statement of cash flows Perform financial analysis using the statement of cash flows 11-2 Learning Objectives Prepare the operating activities section of the statement of cash flows using the direct method 11-3 Part A Formatting the Statement of Cash Flows 11-4 In this section, we will look at how the statement of cash flows is formatted. 4 Learning Objective 1 Classify cash transactions as operating, investing, or financing activities 11-5 Cash Flow Activities Operating activities: cash receipts and cash payments for transactions relating to revenue and expense activities Investing activities: cash transactions involving the purchase and sale of long-term assets and current
