Statement of Cash Flows

Flashcards covering key concepts and terms related to the Statement of Cash Flows.

Statement of Cash Flows (SCF)

A financial statement that provides relevant information about cash receipts and cash payments of a company during a period.

Cash Inflows

The sources of cash entering a business, including sales of goods or services, interest revenue, and dividend revenue.

Cash Outflows

The uses of cash leaving a business, including payments for inventory, interest payments, wages, and expenses.

Operating Activities

Sections of cash flows that involve revenue and expenses directly related to the core operations of a business.

Investing Activities

Sections of cash flows that involve the buying and selling of long-term assets and investments.

Financing Activities

Sections of cash flows that relate to acquiring and repaying capital, including issuing stock or debt.

Direct Method

An approach to displaying cash flows from operating activities that shows major classes of cash receipts and payments.

Indirect Method

An approach to displaying cash flows from operating activities that adjusts accrual-based net income to cash basis.

Noncash Investing and Financing Activities

Significant transactions that do not involve cash, such as exchanges of assets, which are disclosed separately.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible into cash and near maturity.

Net Increase (Decrease) in Cash

The total change in cash balance during a period, calculated from operating, investing, and financing cash flows.

Liquidity

A company's ability to meet its short-term obligations and convert assets into cash.

Solvency

A company's ability to meet its long-term debts and financial obligations.

Financial Flexibility

The ability of a company to adapt to unexpected financial challenges or opportunities using its cash resources.

Balance Sheet

A financial statement that lists a company's assets, liabilities, and stockholders' equity at a specific point in time.

Cash Flows from Investing Activities

Transactions related to the acquisition and disposal of long-term assets and investments.

Cash Flows from Financing Activities

Transactions that affect a company's capital structure, including equity and debt financing.

Current Assets

Assets expected to be converted into cash or consumed within one year.

Long-term Assets

Assets that are not expected to be converted into cash or consumed within one year.

Current Liabilities

Obligations expected to be settled or paid within one year.

Long-term Liabilities

Obligations not expected to be settled or paid within one year.