Chapter 23 - Statement of cash flows. In this chapter students will be able to: Describe the purpose of the statement of cash flows, identify the major classifications of cash flows, differentiate between net income and net cash flow from operating activities,. | PREVIEW OF CHAPTER 23 Intermediate Accounting 16th Edition Kieso ● Weygandt ● Warfield Describe the usefulness and format of the statement of cash flows. Prepare a statement of cash flows. Contrast the direct and indirect methods of calculating net cash flow from operating activities. LEARNING OBJECTIVES Discuss special problems in preparing a statement of cash flows. Explain the use of a worksheet in preparing a statement of cash flows. After studying this chapter, you should be able to: LO 1 Statement of Cash Flows 23 Primary purpose: To provide information about a company’s cash receipts and cash payments during a period. Secondary objective: To provide cash-basis information about the company’s operating, investing, and financing activities. LO 1 STATEMENT OF CASH FLOWS Provides information to help assess: Entity’s ability to generate future cash flows. Entity’s ability to pay dividends and meet obligations. Reasons for difference between net income and net cash flow from operating activities. Cash and noncash investing and financing transactions. LO 1 Usefulness of the Statement of Cash Flows STATEMENT OF CASH FLOWS Income Statement Items Operating Activities Changes in Investments and Long-Term Asset Items Investing Activities Changes in Long-Term Liabilities and Stockholders’ Equity Financing Activities LO 1 Classification of Cash Flows STATEMENT OF CASH FLOWS ILLUSTRATION 23-1 Classification of Typical Cash Inflows and Outflows LO 1 Classification of Cash Flows ILLUSTRATION 23-1 Classification of Typical Cash Inflows and Outflows LO 1 Classification of Cash Flows The basis recommended by the FASB for the statement of cash flows is actually “cash and cash equivalents.” Cash equivalents are short-term, highly liquid investments that are both: Readily convertible to known amounts of cash, and So near their maturity that they present insignificant risk of changes in interest rates. Generally, only investments with original maturities of three months or less . | PREVIEW OF CHAPTER 23 Intermediate Accounting 16th Edition Kieso ● Weygandt ● Warfield Describe the usefulness and format of the statement of cash flows. Prepare a statement of cash flows. Contrast the direct and indirect methods of calculating net cash flow from operating activities. LEARNING OBJECTIVES Discuss special problems in preparing a statement of cash flows. Explain the use of a worksheet in preparing a statement of cash flows. After studying this chapter, you should be able to: LO 1 Statement of Cash Flows 23 Primary purpose: To provide information about a company’s cash receipts and cash payments during a period. Secondary objective: To provide cash-basis information about the company’s operating, investing, and financing activities. LO 1 STATEMENT OF CASH FLOWS Provides information to help assess: Entity’s ability to generate future cash flows. Entity’s ability to pay dividends and meet obligations. Reasons for difference between net income and net cash flow from .
