statement of cash flows

true or false: in the statement of cash flow, “cash” can include cash, cash equivalents, and restricted cash.

true

using the direct method, how would you transfer revenue (from IS) to statement of cash flow (how do you know what is an actual cash received vs AR?)

Rev

-increase in operating assets

+ decrease in operating assets

+increase in operating liabilities

-decrease in operating liabilities

=cash inflows

using the direct method, how would you transfer COGS (from IS) to statement of cash flow (how do you know what is an actual cash received vs AP?)

Expenses

+increase in operating assets

-decrease in operating assets

-increase in operating liabilities

+decrease in operating liabil

=cash outflows

do investors respond more to the GAAP numbers or the nonGAAP numbers

nonGAAP

with special attention to why managers are choosing to disclose it a certain way.

AR and sales

when determining the cash received from customers, which accounts do you use?

salaries expense and salaries payable

when determining the cash paid to employers, which accounts do you use?

AP, inventory, and COGS (need 2 t accounts)

1. write out beg/end balances on an AP t account and a inventory T account.

2. credit COGS to the inventory t account

3. solve for inventory purchased

4. transfer the same number from inventory purchased onto the AP t account (on the credit side)

5. solve for cash paid to suppliers on the AP t account. that is the final answer!

when determining the cash paid to suppliers, which accounts do you use?

add it to the cash flow. it is cash coming IN (more common stock you have the more you have SOLD)

if common stock increases from yr 1 to yr 2, do you add/subtract it on the statement of cash flow

if sale of equip is greater than 0, what does that mean

1. non cash investing and financing activities

2. cash paid for interest and income taxes (if the indirect method is used

what 2 disclosures are required for the statement of cash flows?