Hospitality Management Accounting: Statement of Cash Flows

A collection of flashcards covering key concepts related to the statement of cash flows in Hospitality Management Accounting.

Statement of Cash Flows (SCF)

A financial statement that provides a foundation to predict future cash flows, showing the ability of a business to generate cash.

IAS 7

International Accounting Standard 7: Statement of Cash Flows, which establishes standards for cash flow reporting used in International Financial Reporting standards.

Operating Activities

The principal revenue-producing activities of an entity, which include cash receipts from the sale of goods and services.

Investing Activities

Activities related to the acquisition and disposal of long-term assets and other investments, not included in cash equivalents.

Financing Activities

Activities that result in changes in the size and composition of an entity's contributed equity and borrowings.

Direct Method (Cash Flows)

A method of reporting cash flows from operating activities by disclosing major classes of gross cash receipts and cash payments.

Indirect Method (Cash Flows)

A method of reporting cash flows from operating activities that starts with reported accrual net income and adjusts for non-cash items.

Net Cash Flow from Operating Activities

The result of converting reported accrual net income to a cash basis, including adjustments for changes in working capital.

Cash Equivalents

Short-term investments that are easily convertible to a known amount of cash with insignificant risk of changes in value.

Changes in Working Capital

Adjustments made in the cash flow calculation that account for changes in current assets and current liabilities.

Depreciation

A non-cash adjustment that is added back to net income in the indirect method of calculating cash flows.

Loss on Disposal of Asset

This results in a positive adjustment to net income when calculating cash flows.

Gain on Disposal of Asset

This results in a negative adjustment to net income when calculating cash flows.

Net Cash Flow Change

The overall change in cash based on the addition of net cash flows from operating, investing, and financing activities.

Mortgage Payable

A long-term liability that may affect the cash flows in financing activities, particularly in regards to payments made.